Russian Financial Markets

The Russian economy is booming. Growth rate of around 8 per cent is extremely rare for a European country. Financial markets’ growth was XX per cent despite the world-wide correction in May. From this number alone, it is clear that you absolutely must know basics about Russian Financial Markets if you are seriously consider applying to financially-related organisation upon graduation.

There are two main Russian indexes – RTS and MICEX. Traditionally, the former one is used in media. In 2006, RTS rose over 65% closing 1921 points and MICEX rose over 60% closing 1693. Both indexes alone produced tremendous returns for financial institution, whilst being dragged down by several obvious companies.

The world-wide market correction in May had seriously effect on the Russian markets. RTS fell to below 1300 after reaching 1795 points on the 10th of May. In the first 6 months of the year, the main forces behind the growth were high oil prices, rising metal prices, increasing volatility in all emerging markets, liberisation of Gazprom shares regulations, reform of RAO EES and IPO of a number of Russia companies. Between the 1st of January and the 10th of May, Gazprom grew by 64%, LUKOIL - 52.5%, RAO EES – 84% .

The second half of the year was different thanks to the lead of telecommunications, energy and banking sectors. These helped to recover from after the correction and led to the new highs. Comparing to the high reached on the 10th of May, the growth during the rest of the year wasn’t as spectacular, but some big companies nevertheless grew by over 100%. The main driving forces behind the rally were privitastion of Svyazinvest, reforms in energy sector, IPO “United Generating Company (OGK) – 5” and future IPOs in the banking sector.

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Written by: Mikhail Arzhaev