Analysis

	Russian Stock Market Summary of May 19th, 2008.

A rapid growth mentioned in the previous summary took place in the first days of May. Today a new record has been set – the RTS Index reached 2,498 points. Since the beginning of March trading in the Russian stock market has risen by 20%. The inauguration of the new Russian President D. Medvedev accelerated the market growth. The next day Gazprom shares went up by almost 26 rubles – from 328 to 354 rubles. Within the next few days the price exceeded 365 rubles, but profit taking resulted in a drop to 350 rubles. Massive purchases, which started from that point, brought the price back to 365 rubles. Last Friday this mark was surpassed and a new high has been reached today of 368.80 rubles. The shares of all resource sector companies have been going up in price as well. Regional energy companies have become leaders of this growth. The trend is based on growing prices of gas, oil, industrial and valuable metals. Brent oil has been traded for over 126 dollars per barrel. Gold is again over 910 dollars and platinum – over 2,180 per troy ounce. Since early May Gazpromneft shares have gone up by 27% - from 141 to 178 rubles. The five-wave cycle of growth from the April low of 128.8 rubles seems to be over and a correction to 162 rubles may be reasonably expected. A deeper correction to 158 and 152 rubles is also possible. However the upward trend will remain. The growth of Nornickel shares since early May comprised over 10%. The price has exceeded the 7,000 rub. mark. After testing this level, purchases resulted in an increase to 7,200 rubles. Sales connected with profit taking followed. After a short period in the trading corridor between 7, 000 and 7,180 rubles, the price will gradually go up to 7,300-7,350 rubles. The growth of raw material prices and a guarantee of the continuation of the political and economic policy in Russia provided a stable foundation for the market and resulted in price growth. In the future the growth will slow down, but even in case of the worst possible scenario, crashes similar to the one in January are not likely to happen in the long term.