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. Last Updated: 07/27/2016

MT Index To Provide Overview Of Markets

The Moscow Times is launching in Tuesday's issue the MT Index, Russia's most complete stock index, which will chart the daily progress of shares in the country's burgeoning financial markets.


The index of 30 leading companies, monitored by a nine-company advisory board, will provide a key tool for financial managers to "measure the performance of their investments, compare their stocks against the general behavior of the market and see growth opportunities," said Sergei Skatershchikov, a director of the Skate Press Consulting Agency that compiles the index.


"It's a huge step in the disclosure of financial information in Russia," he said.


While foreign investment in shares of Russia's privatized companies has boomed this year to some $500 million a month, the country's stock market still lacks the transparency of its counterparts in the West, where indexes and detailed information compiled by news organizations like Dow Jones and The Financial Times have become commonplace. Russia has no centralized stock exchange, trading in securities remains largely unregulated and basic information for market players has been patchy at best.


The index will monitor over-the-counter stock prices quoted to Skate Press by leading brokerage firms, avoiding the formal stock exchanges because the vast majority of trading in shares of Russia's privatized companies takes place outside the exchanges.


According to Boudewijn Poelmann, a director of Independent Media, which publishes The Moscow Times, the creation of a daily index represents a major step toward a more civilized market.


"A good stock index, well-prepared by professionals, will stimulate the development of a normal stock exchange," said Poelmann. "This, in turn, will encourage foreign investors to get involved in the Russian economy, in which there are so many opportunities but about which so few people know."


The daily MT Index figure will be displayed, along with the ruble exchange rate, on the front page of The Moscow Times in the Inside box. A column-long table in the Business section will contain a graph with the index level for the previous two weeks and a listing of the prices of the 30 index stocks and more than 20 other companies.


The table includes information on where to get the best rates for buying and selling dollars plus futures rates for dollars, interbank interest rates and prices for treasury bills and "taiga" bonds.


The index takes as its starting point the market capitalization, or the total value of shares, of the 30 companies selected for the index. On Sept. 1, the day the index was first calculated, the total share value for these firms was 51.75 trillion rubles ($23.48 billion at that day's exchange rate).


By Monday, the value of these shares had already increased from their base figure of 100 to 113.72, highlighting the rapid growth of Moscow's fledgling stock market.


The companies included in the MT Index were selected on the basis of the size of their market capitalization. Other companies were ruled out because information on their activities was inadequate or trade in their shares had not yet developed, said Skatershchikov of Skate Press. He added, however, that he hoped to increase the size of the index as trading becomes more regulated and more information becomes available.


Skatershchikov's company also provides securities information for Izvestia's weekly financial supplement and works with Dun & Bradstreet on a company information service.


The advisory board monitoring the index brings together some of the leading players and experts on the Moscow securities markets, including representatives of Troika Dialog, Coopers & Lybrand, Ernst & Young, KPMG Peat Marwick, Alfa Kapital, RINACO Plus, Grant Financial Center and law firm Milbank Tweed. The Moscow Times and Skate Press are the other two participants on the board. The index is audited by Coopers & Lybrand.


The board will meet quarterly to review listed stocks and propose additions.


Skate Press will calculate the average price of each stock by averaging buy and sell prices from more than 40 licenced brokerages, Skatershchikov said.


He added that the price will not be weighted to take account of the volume of trade in a given share, because in the absence of a centralized stock market it is impossible to gauge trading levels with any degree of accuracy.


Despite the difficulties in tracking Russia's nascent securities, brokers and analysts were bullish about the service's prospects.


"If you're speaking to half a dozen brokers each day then your figures are going to be as accurate as anyone else's." said Gareth Williams, a London-based broker in Russian securities with Morgan Grenfell bank, one of the major players on the market.


Williams said lack of knowledge of current trading prices had created large disparities in the prices paid for the same security.