August 27     - There were rumors that ConocoPhilips, the main contender to purchase the state stake in LUKoil, will increase its stake to 25% by buying shares on the open market. LUKoil stock gained 3.4%.
                      - The Moscow Arbitration Court ruled that YUKOS’s back taxes for 2000 should be reduced by 33 million rubles.
                      - The Federal Antimonopoly Service approved the creation of a single United Generating Company based on hydroelectric stations.
                      - Prime minister Mikhail Fradkov announced that Svyavinvest will be privatized in 2005.
August 30     - The extraordinary YUKOS shareholders meeting to decide how to “divorce” the company from Sibneft was cancelled.
                      - The Ukrainian Prosecutor General is protesting the legality of MTS’s purchase of the Ukrainian company UMC in Ukrainian Constitutional Court. MTS’s ADR fell by 0.26%.
August 31     - MTS announced its second quarter results and its ADR rose by 6.5%.
September 1 - YUKOS announced that by the end of November, Sibneft’s former owners will regain control of the company.

Last week saw the dollar exchange rate rise by 4 kopecks to 29.26 rubles to the dollar, only to drop slightly as the market adjusted. Trading was heavy as market players returned from summer vacation. Reduced tensions on the money market connected to the beginning of a new month will likely lead to further strengthening of the American currency (and over the course of the week the short-term IBC rate fluctuated between 6.7-10.5%, while correspondent accounts did not exceed 190 billion rubles for most of the week and were only able break the 200 billion market as autumn began).
The federal ruble bond market continued to see fairly light trading due to a lack of free ruble resources. Federal bond prices fluctuated slightly without a single clear trend, and the weighted average price for GKO-OFZ bonds did not change for the week.
The corporate and municipal bond market finally broke out of its stalemate last week. Trading increased considerably, especially among blue chip corporate securities and long second-tier bonds. Vympelkom saw the most action, bringing more than 50% yield to its holders. This growth on the ruble bond market reflects investor hopes that the market will regain its liquidity come autumn.
After a break at the start of the week on the eurobond market (due to a holiday in the UK almost no trading took place last Monday), quotes continued to climb in reaction to the strong growth of benchmark assets. However, news of terrorist attacks in Moscow and the school hostage crisis in Beslan dragged prices down slightly. As a result the Russian segment’s spread increased by seven points, and Russia-30s closed at 95.6% of face value.
Things looked up on the stock market last week for the first time in a long time as the RTS Index gained 1.5%. The absence of serious bad news across the market in addition to a variety of important positive changes allowed Russian investors to start forming long-term positions. The market began to grow in anticipation of the announcement of prices and dates for open auctions of a 7.59% state stake in LUKoil. The first real positive news came when the Russian Fund for Federal Property announced the starting prices for the oil assets, $1.928 billion, or $29.83 per share, which meant a small premium to the market as many investors had hoped. The next good tidings came when ConocoPhilips announced plans to buy a blocking stake in the oil company. This brought on the beginning of the autumn rally. As strategic investors continued to buy up Mosenergo shares and the government is considering whether to found the United Generating Company-5, prices for RAO UES shares rose. These stocks all became market leaders for the week (LUKoil gained 4.3%, RAO UES 5.2%, and Mosenergo 12.9%). This week’s outsiders were Norilsk Nickel and Sberbank which only grew by less than 2%.

September 7       Irkutsk Province places 750 million rubles in bonds
September 10     Wimm-Bill-Dann extraordinary shareholders meeting