A. Potemkin MICEX, President Russian stock market’s SWOT analysis: Moscow’s viewpoint

2 What makes the Russian stock market grow?

3 What makes the exchanges’ market grow?

4 Issuers: stale bread or hot cakes?

5 Second tier equities — «goods in stock» For what purposes do you recommend to buy the second tier equities? ­As long term investments with a positive outlook — 90% How fair are the market prices of the second tier equities? ­The market prices are lower than fair prices — 75% Based on the MICEX April 2007 survey, respondents are analysts of investment companies and banks

6 Last 15 Months — Post IPO source: Tracey Pierce, Head of Global Business Development at the London Stock Exchange

7 Coming soon … In 2007—2009 more than 150 companies plan to raise through IPO 30—50 bln USD Largest IPO’s in the nearest future CompanyIndustry Est. IPO volume mln USD 1VneshtorgbankBanks Freight Railway CompanyTransport Generation companies (RAO UES plans 10—15 IPO) Electric power — SovcomflotTransport700 5PharmstandardPharmacy600 6IngosstrakhInsurance500 In 2005—2006, 27 Russian companies have raised 21 bln USD through IPO

8 Investors in the Russian market: who are they? Number of investors thsd, end of the year Investors March 2007 Individuals Legal entities Non-residents Mutual funds, trust accounts Total Dealers trades 14.2% Russian individuals 23.8% Russian legal entities 27.3% Non-residents 27.7% Clients of mutual funds 7.0%

9 Does the foreign capital have a citizenship? Investors-non-residents on the MICEX SE in 1Q 2007 Turnover in mln USD and number of participants

10 How many indices does the Russian stock market need? MICEX Index RTS FTSE Russia IOB Index RTX DJ Titans Russia… MSCI Russia DAXglobal Russia Market in 2006

11 Structure of trades by economy sectors

12 Reserve list selection criteria Тор-100 : 100 most capitalized equities Equities admitted to trading on the exchange Тор-60 : 60 most traded equities Reserve list (10 sectors) Selection criteria 30 equities in current index not more than 3 equities from an economy sector (not more than 9 equities from a sector including current portfolio) free-float > 5% common or privileged equities of an issuer if an issuer has equities of any type in an index portfolio, the equities of another type are not included

13 Index portfolio starting April 15, 2007 Index portfolio till 15 April (21 equities)Current index portfolio (30 equities)

14 MICEX Index MICEX O&G MICEX TLC Metals & Mining MICEX PWR Index family structure Consumer Manufacturing 10 Large Caps 30 Middle Caps 50 Small Caps

15 Infrastructure development prospects: what should be done first? Centralized clearing (CCP) Lowers the participants costs Increases stock market liquidity Creates customary environment for non-residents Central Depository Promotes OTC development Creates customary environment for non-residents Offers securities owners’ rights protection Increases stock market transparency ?

, B. Kislovskiy per., Moscow, , Russia Contacts