Investments News

May 15 (Bloomberg) — Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, talks about China’s economic growth outlook and its central bank monetary policy.
Foreign direct investment in China fell for sixth month in April, dropping 0.7 percent from a year earlier to $8.4 billion, the Ministry of Commerce said today in Beijing. Zhang speaks with John Dawson on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

China’s stocks fell, dragging the
benchmark index to the lowest level in a month, after foreign
direct investment dropped and Pacific Investment Management Co.
said the nation’s economic slowdown may deepen.

Jiangxi Copper Co. and Aluminum Corp. of China Ltd. paced
declines for metal producers as the political impasse in Greece
fueled concerns that the country may leave the euro area.
Yanzhou Coal Mining Co. (600188) slid to the lowest in three weeks after
the price of the country’s coal for power stations declined for
the first time since at least 2009. Qingdao Haier Co. led a
rally for household appliance stocks on speculation the
government may introduce stimulus measures for the industry.

“Stocks are falling because there’s a combination of bad
news from Europe and China,” said Zhou Lin, an analyst at
Huatai Securities Co. in Nanjing. “The Europe crisis is
worsening with Greece potentially being kicked out. The Chinese
cut in reserve-ratio requirements indicates the government’s
concern about the economy’s health. Investors are expecting the
growth to slow further in the second quarter.”

The Shanghai Composite Index (SHCOMP) fell 5.9 points, or 0.3
percent, to 2,374.84 at the close, the lowest level since April
17. The CSI 300 Index (SHSZ300) snapped five days of losses, gaining 0.1
percent to 2,617.37. The Bloomberg China-US 55 Index (CH55BN), the
measure of the most-traded U.S.-listed Chinese companies,
tumbled 2.4 percent in New York yesterday.

Investment Slump

The Shanghai index dropped 0.6 percent yesterday even as
the central bank announced a third cut in lenders’ reserve
ratios since November. About 9 billion shares changed yesterday,
15 percent higher than the daily average this year. Thirty-day
volatility in the gauge was at 15.2 today, the lowest since
March 27.

For the year, the Shanghai index has climbed 8 percent on
expectations the government will relax monetary policy and take
measures to bolster equities. Stocks in the gauge are valued at
10.2 times estimated earnings, compared with a record low of 8.9
times on Jan. 6, according to weekly data compiled by Bloomberg.

Foreign direct investment in China fell for a sixth month
in April, as faltering global growth and renewed turmoil in
financial markets dented company spending in Asia’s biggest
economy.

Inbound investment declined 0.7 percent from a year earlier
to $8.4 billion, the Ministry of Commerce said today in Beijing.
That compares with a 6.1 percent drop in March and extends the
longest stretch of declines since the global financial crisis.
The estimates of five analysts in a Bloomberg News survey on
April investment ranged from a drop of 3 percent to a gain of
8.2 percent.

Deeper Slowdown

Jiangxi Copper, the biggest producer of the metal, slid 1.3
percent to 25.22 yuan. Chalco, the listed unit of nation’s
biggest maker of the lightweight metal, declined 0.9 percent to
6.91 yuan.

Asia stocks dropped as the political impasse in Greece
added to speculation the nation will leave the euro currency
union and Moody’s Investors Service cut the credit ratings of 26
Italian banks, damping demand for riskier assets.

Pimco, which oversees the world’s largest bond fund, sees
Chinese growth this year in the “mid-7 percent range,” a pace
unseen since 1999. Its call is still lower than that of banks
from Citigroup Inc. and JPMorgan Chase Co. to Bank of America
Corp. and UBS AG, which all pared their forecasts after April
economic data were released last week.

“Anything less than 7.5 percent GDP growth would border on
a disaster,” Michael Mullaney, who helps manage $9.5 billion as
chief investment officer at Fiduciary Trust in Boston, wrote by
e-mailed response. “Material stocks as a whole will continue to
suffer with any incremental weakness.”

Coal Stocks

Yanzhou Coal lost 1.4 percent to 23.26 yuan. China Shenhua
Energy Co., the largest coal producer, fell 1.2 percent to 25.95
yuan. The benchmark coal price at Qinhuangdao port with an
energy value of 5,500 kilocalories per kilogram fell 0.6 percent
from a week earlier to a range from 775 yuan ($123) to 785 yuan
a metric ton as of May 13, according to data yesterday from the
China Coal Transport and Distribution Association.

Shenhua’s Hong Kong-traded shares were rated hold at UOB-
Kay Hian Holdigs Ltd., which said valuations are “not very
attractive” amid a margin squeeze and earnings growth
deceleration.

China Southern Airlines Co., the nation’s biggest carrier
by passenger numbers, declined 0.9 percent to 4.65 yuan. China
warned its tourists last week to avoid “unnecessary” travel to
the Philippines amid a dispute between the two countries over an
island in the South China Sea.

Stimulus Speculation

Qingdao Haier, the biggest maker of refrigerators, surged
7.8 percent to 12.20 yuan. Gree Electric Appliances Inc. (000651), which
makes air conditioners, rose 2.8 percent to 21.91 yuan.

“Last month, there was a report saying the government may
have more stimulus measures for home appliances,” said Li Jun,
a strategist at Central China Securities Co. in Shanghai.
“That’s due to happen by the first half. It could be that
there’s new information on this matter.”

China may set up a new mechanism for foreign pension funds
to invest in the country’s capital markets, the Wall Street
Journal reported, citing unidentified people familiar with the
matter. The program would be separate from the qualified foreign
institutional investor program, known as QFII, China’s main
official international investment program, the report said.
Taiwan, Hong Kong and Singapore pension funds without QFII
licenses may be among the first to be included in the new
program, the report cited one of the people as saying.

South Korea’s National Pension Service, the country’s
biggest investor, plans to seek approval to buy more yuan-
denominated Chinese stocks after using up the initial quota of
$100 million it received in March.

The IShares FTSE China 25 Index Fund, the biggest Chinese
exchange-traded fund in the U.S., retreated 1.7 percent to
$34.74 yesterday.

To contact the reporter on this story:
Weiyi Lim in Singapore at
wlim26@bloomberg.net;

To contact the editor responsible for this story:
Darren Boey at dboey@bloomberg.net

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Hansa FinCon OY: Russian Finance and Investment Forum in Frankfurt/Main

EquityStory.RS, LLC-News: Hansa FinCon OY / Key word(s): Miscellaneous

Hansa FinCon OY: Russian Finance and Investment Forum in

Frankfurt/Main

14.05.2012 / 10:00

———————————————————————

Russian Finance and Investment Forum in Frankfurt/Main

This year’s the Russian Finance and Investment Forum will be held on the

26-27 of June 2012 in Frankfurt-am-Main. Main topic of the Forum will be

Venture Capital and Private Equity Investments in the Russian market.

The Forum aims at introducing Russian Companies, StartUps and the different

Russian Regions to European Investors. Siberian and Far East regional

projects are among main priorities of the Forum.

The Forum is organized in cooperation with Delovaya Rossia, the main

Russian Business organization, the Agency for Strategic Initiatives and

with the European Society for Financial Cooperation.

Konstantin Pozdnyakov, Chairman of the Committee for Young Entrepreneurs of

the Delovaya Rossia ‘ Modernization needs new leaders, new ideas, effective

business models and economic transformation. Our aim is to support

innovative businesses from the non-commodity sector and support the

business activity of young people’

Thomas Feldt, Member of the Board of the European Society of Financial

Cooperation

‘In spite of progress made throughout the last years, it is still

difficult for Russian entrepreneurs to attract direct investments from

western banks and financial institutions. Our goal is to provide such

networking platform for Russian Companies and Western Investors’

Information

Russia is one of the few countries which can offer substantial growth and

returns for investors. The Forum will bring together Russian asset managers

and firms looking for capital and partners to develop new markets with

venture capital firms, investment banks, asset managers as well as

government officials from Germany, Austria, Switzerland and Luxembourg.

Focus will be the potential of Russian firms and the opportunities for

investors in Russia.

Highlights of Forum include:

- Keynotes from renowned Institutional Investors

- Hands-on case studies from successful co-operation projects

- Networking platform for the participants

Presentations / Panel Discussions:

- RTS: Russian equities

- Untapped Potential: The offerings of Russian Asset Managers

- Direct Investment in Russia and the countries of the former Soviet

Union: More than Commodities

- The Russian provinces: Competitive taxes and highly skilled workforce

- Financial Regulatory Framework in Russia

- Kaspersky Co.: Investment Opportunities in the Russian IT Sector

The Forum is supported by

– Delovaya Rossia

– Agency for Strategic Initiatives

– Agency for Economy Development of Frankfurt

– European Society of Financial Cooperation

Forum web www.russia-invest.org

Contact Information

Hansa Fincon is a provider of marketing and consulting services for

international companies in the financial industry. The company focuses on

so-called ‘hidden markets’ and supports Western financial companies in

creating new partnerships and distribution channels. In the last five

years, Hansa Fincon organized events and assisted in market entry for

different companies in Russia, Germany, Morocco, Spain, Gibraltar, the

United States and in the Ukraine.

Elena Snorkina PR

+ 7(915) 223 01 61

pr@hansafincon.com

Registration: http://russia-invest.org/ru/participation.html

End of Corporate News

———————————————————————

14.05.2012 Dissemination of a Corporate News, transmitted by

EquityStory.RS, LLC – a company of EquityStory AG.

The issuer is solely responsible for the content of this announcement.

EquityStory.RS, LLC’s Distribution Services include Regulatory

Announcements, Financial/Corporate News and Press Releases.

Media archive at www.dgap-medientreff.de and www.dgap.de

———————————————————————

169591 14.05.2012

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A “milestone” investment agreement between China, Japan and the Republic of
Korea was signed in Beijing on Sunday, after years of negotiations, while the
leaders of the three nations announced that talks focusing on a free-trade
agreement would be launched within the year.

Aside from substantial economic benefits, experts said that the FTA, if
realized, could help ease regional tension and possibly lead to a more
integrated Northeast Asia.

Washington, which is pushing forward its Trans-Pacific Partnership, should
not feel concerned about the potential three-way FTA as any future agreement
will also be in the interests of the US, experts said.

Premier Wen Jiabao, ROK President Lee Myung-bak and Japanese
Prime Minister Yoshihiko Noda attend the fifth trilateral meeting in Beijing on
Sunday. The three nations reached an agreement that they will not accept further
nuclear tests or any provocations from the Democratic People’s Republic of
Korea.

Trade ministers from the three countries signed a promotion, facilitation and
protection of investment agreement on Sunday as their leaders—Premier Wen
Jiabao, ROK President Lee Myung-bak and Japanese Prime Minister Yoshihiko
Noda—met in Beijing ahead of a summit scheduled for Sunday and Monday.

“The investment agreement is the first legal document on trilateral
cooperation in the economic field, it is a milestone,” Wen said at a joint news
conference at the Great Hall of the People.

China welcomes Japan and the ROK expanding their investments in China and
hopes they will be primary destinations for China’s overseas investments, he
said.

“The global economy is recovering slowly while the European debt crisis is
not over,” Wen said.

“The establishment of a free-trade pact will unleash the economic vitality of
the region and give a massive boost to economic integration in East Asia,” he
said.

The investment agreement, concluded in March after 13 rounds of negotiations
since 2007, includes 27 clauses and one additional protocol covering topics such
as investment definition and dispute resolution, according to a statement on the
website of the Ministry of Commerce.

The pact will provide a more stable and transparent investment environment
for the three parties and is an important basis for the FTA, according to the
ministry’s statement.

“The investment agreement and the establishment of the FTA will see China
further open up its market, upgrade industries and be a new driving force for
China’s economic growth,’’Zhang Xiaoji, a researcher at the State Council’s
Development Research Center, said.

The establishment of a three-way FTA could enhance China’s GDP growth by 0.5
percent and domestic employment by 0.1 percent while accelerating exports by
more than 4 percent, Zhang said.

“The past three decades have seen Japan and the ROK increase investment in
China but the next three decades will see China increase investment in these two
countries. The investment agreement will play a very positive role in deepening
investment cooperation,” Zhang Yansheng, secretary-general of the academic
committee of the National Development and Reform Commission, said.

Japan and the ROK are leading investors in China.

Japan invested about $80 billion while the ROK invested about $50 billion up
to the end of last year, according to a report released by the Foreign Ministry
on May 9.

“The build-up to the FTA will see more and more goods enjoy zero-tariff
treatment and more services traded. It will help China bring in advanced
technology and talent from these two partners,” Zhang Yansheng said.

Trade between the three countries surged to more than $690 billion in 2011
from $130 billion in 1999.

China has been the largest trading partner of Japan and the ROK for several
years while Japan and the ROK are China’s fourth and sixth-largest trading
partners respectively.

While Tokyo and Seoul are concerned about their agriculture sectors, China
will see challenges to its manufacturing, said Wang Luo, a researcher from the
Chinese Academy of International Trade and Economic Cooperation, a Ministry of
Commerce think tank.

Qu Xing, director of the China Institute of International Studies, said the
FTA could help ease regional tension and may finally lead to an integrated
Northeast Asia.

The FTA could even lead to a joint currency, he added.

“It might be a breakthrough in solving regional disputes.”

The FTA, with greater cooperation between the three countries, will
ultimately benefit the US, Qu said.

However, Derek Scissors, economist at the Heritage Foundation, said China
will sign a trade agreement fairly soon with the ROK but it will be more
difficult for Japan.

“It will be hard for Japan to join the Trans-Pacific Partnership because it
will require major economic changes. It will also be hard for Japan to sign a
free-trade agreement with China for political reasons, because it would seem
that Japan was choosing China over the US,” he said.

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Most of the information you read, hear, or watch pertaining to investing is either too simplistic or too complicated to be effectively implemented in your investment strategy.  If you attempt to react to the minute details of each bit of market or economic news hitting the CNBC ticker, you’ll likely first, go crazy, and second, struggle to maintain any consistency in your investing.  Conversely, the static buy-and-hold strategy is entirely too simplistic.

From the day the market peaked on September 7, 1929, it would have taken until 1954 just to break even if you bought and held.  That is a pretty long time to wait, especially if you were planning to retire in 1932.  Although some seem to treat it as such, the market is not a benevolent universal force that promises to grow our money as long as we’re willing to invest it over a long stretch of time.

The Return Of Your Money

Samuel Clemens, A.K.A. Mark Twain, didn’t claim to be an investment guru, but he tapped into Warren Buffett’s famous two rules of investing[i] even prior to the Oracle’s birth when he said, “I am more concerned about the return of my money than the return on my money.”  It’s a phrase that no doubt haunts many who’ve attempted to profitably navigate the tech bubble and The Great Recession, especially as they watch the broadening European debt crisis unfold like a slow-motion 20-car-pile-up.

The math of making capital preservation a material, if not primary, tenet of your investment strategy is less sexy than the risk-equals-reward zealousness, but compelling nonetheless.  It’s hard to argue with the numbers: If you lose 10% in an investment, you need to make 11% to get back where you started.  A 20% loss requires a 25% gain to break even, but a 50% loss requires a 100% climb just to get back to ground zero. 

Risk Management

Regardless of your age or appetite for risk, losing money has never been an advisable investment strategy, but that hasn’t stopped a host of experts and their followers from pursuing a myopic route down testosterone highway to the land of aggression.   Although couched in decades of looking in the investment landscape’s rear-view mirror, these strategies smell more like gambling than investing.  True investors are in the risk management business and hate losing money.  Ever.

But how to get there?  You have three options:

1. Become a brilliant investor with the intuition, skill and work-ethic to outperform the tens-of-thousands of eminently qualified fund managers, analysts and traders seeking to eat you for breakfast.  Marry macro-economic genius, Grahamian fundamentalism and trend-driven technicality, and dedicate your every waking moment to acting and reacting on that knowledge.
2. Hire one or more of the above.
3. Deny the existence of outperformance and alpha[ii] and adopt a passive[iii] approach to portfolio construction.

For the moment, I’m going to steer clear of the doctrinal battle over active versus passive investment management.  Although I do have an opinion in the matter, there are simply too many brilliant people on either side of this argument for me to stage a campaign against any of them.  Instead, I implore you to consciously choose your path—don’t just default into a purposeless, “convictionless” strategy—and consider how a RISK MANAGER would handle either of these situations.  Since mutual funds are the predominant way most apply their investment strategy,  let’s conduct a quick examination of the three classifications into which most mutual funds fall:

Index Huggers, Return Chasers and Risk Managers

Risk manager is one of three classifications into which most mutual funds fall: index huggers, return chasers, and risk managers. 

Index huggers make up the vast majority of a largely mediocre array of mutual fund options.  Most of the funds you likely hold—and, unfortunately, most of the options in 401ks and other retirement plans—are index huggers.  Most managers, in the spirit of self-preservation, resort to plugging along with the index, playing it safe to keep their status in the big institutional programs.  Do not pay a mutual fund company or financial advisor to settle for index huggers.  If you look at a chart of the performance of the fund, you’ll find that it seems to move in perfect correlation with the benchmark index to which it is compared.  If you’re pursing a passive investment approach and the hugged index is one that is desirable, consider replacing the hugging fund with an index mutual fund (Vanguard is a mutual fund family with a number of good, low-cost index funds) or an exchange-traded fund[iv].

Return chasers are typically high-flying mutual funds that seem bent on making it onto the cover of a financial magazine for having a stratospheric up year.  The problem is that when they bet wrong, you’re likely to suffer greatly on the downside.  In order to spot return chasers, take a look at years like 1999, 2003, and 2009.  If your fund was up by a very significant margin in those years, you likely own a return chaser.  You should certainly not be opposed to owning a fund that gives you a phenomenal return, but you’ll probably notice that any fund that achieves single-year returns in the 40 percents or above will also have years in which they bet big—and lose big.  Return chasers need not be eliminated from your portfolio altogether, but they must be very carefully monitored and avoided by novice investors when in the midst of a secular bear market (like we’ve been in since 2000).

Risk managers are the small subset of mutual fund managers who prioritize avoiding losses over chasing returns.  You’ll find risk managers by examining years like 2001, 2002, and 2008.  Those were years in which the major market indices were down, along with many mutual funds.  If you have a fund that was positive or only mildly down throughout the three-year stretch from 2000 through 2002, that’s a sign of a risk manager.  In 2008, even most good risk managers were down by a decent margin.  If your fund survived the 2000–2002 stretch, and was down by around 20 percent or better in 2008, you may have a capable risk manager at the helm.

Passive or active, a greater emphasis on risk management in your portfolio will help lower your investing blood pressure…and may just lead to higher returns in the long-run.  I have designed an online app that will help you qualify each of your mutual fund holdings, so click HERE to find instructions and a free downloadable exercise designed to help.

Much of the material in this post was legally stolen from the book I co-authored with best-selling author, Jim Stovall, called The Ultimate Financial Plan: Balancing Money and Life, in which you’ll find more on this particular subject in Chapter Nine: The Gift of Clarity.

---

[ii] Alpha is the ability of an investment manager to outperform a benchmark on a risk-adjusted basis, to get more return for less risk.

[iii] Passive theorists effectively believe that you can’t beat the market so don’t try, instead developing a diversified “asset allocation” that should remain largely static over time, only “rebalancing” the portfolio as various segments expand and contract through market cycles.

[iv] But you must be careful.  Although most exchange-traded funds (ETFs) are simple in their objective (they seek to track a specific index), they can be quite complicated in design and require a level of sophistication on the part of the investor as they have virtually no professional management.

 

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Many of my former business class students at university snickered at anyone studying psychology, considering it an easy discipline. Big mistake. Business students learn only too late they should have attended a psyche class or two because investment success and market direction are often more closely tied to psychology than they are to economics.

Take the recession of 2008. Sure, there were big financial problems, but it was fear that drove the runs on the banks and caused even more financial issues and markets to suffer.

Investors need to be careful of behavioural biases that can negatively impact their investment returns. Mario Mainelli, in the May 2012 issue of Canadian MoneySaver, explains four biases to watch out for. We have summarized them here, and show you how to catch yourself when you fall into one of their traps.

Confirmation Bias

Investors displaying confirmation bias only look at the information that confirms their beliefs and ignore any information that contradicts it. This can lead to investor overconfidence, and in some situations an under-diversified portfolio or an unjustified purchase decision.

Confirmation bias is particularly difficult to overcome when examining stocks already owned. “You may be more likely to ignore negative information on a stock you own because you simply refuse to believe you may have made a bad purchase”, Mainelli writes.

To counter this bias, gather as much information as possible and make a special effort to note contradictory arguments.

Familiarity Bias

There is no correlation that connects the distance of an investor to a stock exchange with the chance of investment success. But Canadian investors still tend to stuff their portfolios with domestic stocks and bonds. This is a particularly painful decision these days, because weak commodity sectors have meant the TSX has fared poorly compared to the SP 500 Index so far this year.

The best solution: Ensure your domestic choices are indeed the best available by doing more research on international investments and alternative asset classes.

Availability Bias

Availability bias is the tendency to estimate the probabilities of future events based on how easily a past event can be recalled. Advertisers have known this for years, but it can have the same effect on investors that it has on consumers.

An investor who suffers from availability bias will be more likely to pursue an investment that has been heavily advertised and more popular in the news simply because they can recall it more easily. There are probably plenty of investors in Research In Motion Ltd. or Apple Corp. these days simply because they are both in the media nearly every day.

What makes this bias worse is that individual memories are often incomplete, leading investors to recall an investment opportunity for the wrong reason.

Thorough planning is a simple way to mitigate this bias. Construct a long-term plan for your portfolio, detailing how and why your assets will be allocated and diversified. Also make sure to keep detailed records of why specific purchases are made, including both the pros and cons of each investment choice.

Such an approach should eliminate the temptation to invest in a product merely because it can be easily recalled.

Loss Aversion Bias

Investors who suffer from loss aversion bias focus on investment gains/losses rather than their risk/return combinations. It’s a subtle difference, but one that can have major ramifications. Many investors psychologically cannot accept the loss they have incurred and make sub-optimal decisions to avoid realizing the loss.

For example, investors who bought into Nortel at its peak would have witnessed a sharp decline in their shares’ value, along with red flags that screamed “Sell.” Investors exhibiting loss aversion bias would see the red flags, yet avoid selling because they are convinced the stock will rebound.

This bias is similar to confirmation bias because it causes investors to ignore negative information. But it may also lead to an unnecessarily risky portfolio.

Distraught Nortel investors in the example above may take on another risky position to make up for their original loss in value from Nortel. As a result, the investor unnecessarily holds two risky positions that probably do not fit their investment needs.

At this point, Mainelli notes the smartest thing to do is to re-evaluate your position and your asset allocation. Try to figure out whether this has been a temporary decline, or whether the company’s rapidly deteriorating fundamentals are just the tip of the iceberg.

Peter Hodson, CFA, is CEO of 5i Research Inc., a conflict-free independent investment research network

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 |  03.05.2012, 15:31  | 
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African Opportunities Investment Capital Ltd:

DGAP-News: African Opportunities Investment Capital Ltd / Key word(s):

Letter of Intent

African Opportunities Investment Capital Ltd:

03.05.2012 / 15:30

———————————————————————

PRESS RELEASE

African Opportunities Investment Capital Ltd (AOIC):

Frankfurt, Germany, 3rd May 2012 – AOIC would like to inform shareholders

of its intention to acquire a significant asset in Papua New Guinea.

Details of the acquisition will be provided to shareholders on the

completion of the deal.

AOIC was formed in October 2010 with the objective to invest in and fund

emerging market businesses with good future potential, a diversified

portfolio, solid management teams and the potential for good growth.

For more information, please contact:

Alex Glover, Tel.: +44 (0) 20 7608 2280 0 +44 (0)7887 610 335

alex.glover@fininternational.com

Disclaimer

This publication constitutes neither an offer for the sale of or an

invitation to buy securities of African Opportunities Investment Capital

Ltd. This document is not an offer for securities for sale in the United

States of America. Securities may only be sold or offered for sale in the

United States of America following their prior registration in accordance

with the provisions of the U.S. Securities Act of 1933 as amended or,

without prior registration, only on the basis of an exemption. The shares

of African Opportunities Investment Capital Ltd. are not and shall not be

registered in accordance with the provisions of the U.S. Securities Act of

1933 as amended and are neither sold nor offered for sale in the United

States of America.

This document is only distributed to and targeted at (i) persons outside of

the United Kingdom or (ii) professional investors pursuant to Article 19(5)

of the Financial Services and Markets Act 2000 (Financial Promotion) Order

2005 or (iii) companies with assets and other persons with assets pursuant

to Articles 49(2)(a) to (d) of the Order (with these persons being referred

to as ‘qualified persons’). All securities referred to here are available

to qualified persons only and any request, offer or agreement to obtain,

purchase or acquire such securities by any other means shall only be made

in relation to qualified persons. Individuals who are not qualified persons

should under no circumstances take action on the basis of this information

or its content.

End of Corporate News

———————————————————————

03.05.2012 Dissemination of a Corporate News, transmitted by DGAP – a

company of EquityStory AG.

The issuer is solely responsible for the content of this announcement.

DGAP’s Distribution Services include Regulatory Announcements,

Financial/Corporate News and Press Releases.

Media archive at www.dgap-medientreff.de and www.dgap.de

———————————————————————

167978 03.05.2012

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<!– hack to avoid firefox v

Weekend Investor

Mexico, Canada put your stock portfolio on the map

5.

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Enlarge image

Russia’s Micex-RTS President Ruben Aganbegyan

Peter Foley/Bloomberg

Ruben Aganbegyan, president of Russia’s Micex-RTS stock exchange.

Ruben Aganbegyan, president of Russia’s Micex-RTS stock exchange. Photographer: Peter Foley/Bloomberg

Russia needs a “paradigm” shift
in local investment trends to bolster its main stock exchange as
volumes sink 40 percent below the level of trading in Russian
shares in London, the head of the Micex-RTS Exchange said.

“The biggest lag for the Russian market is the absence of
local long-term money, and that is something that we need to fix
for sure,” Ruben Aganbegyan, president of the Moscow-based
Micex-RTS, said in an interview yesterday at Bloomberg’s
headquarters in New York. There needs to be a “change of
paradigm” when it comes to the nation’s pension system, which
is mandated to focus on annual returns and doesn’t generally
invest locally, he said.

The 30-day average value traded in shares of 10 of Russia’s
biggest companies in London was $1.2 billion on April 16,
compared with $760 million on the Micex-RTS, data compiled by
Bloomberg show. London volumes exceeded Moscow’s by 74 percent
on March 19, the most since November 2008, and the only initial
public offering by a Russia-based company this year was
undertaken in the British capital.

Aganbegyan, formerly head of investment bank Renaissance
Capital’s Russia unit, is trying to implement reforms needed to
boost investment and liquidity on his trading platforms. The
Micex-RTS was formed out of a merger between Moscow’s ruble-
denominated Micex and the derivatives-focused RTS in December.

The exchange plans to debut a central securities depositary
in July, and replace immediate settlement of trades with a
protocol in line with developed markets by November, allowing
traders either two or three days to finalize transactions,
Aganbegyan said yesterday. While these reforms will help make
conservative investors more comfortable trading on the Micex-RTS
“I don’t think any of this is enough on a stand-alone basis to
boost trading,” he said.

‘Less Than 1%’

“A portion of Russia’s pension system should be invested
into the equity market,” he said. “Less than 1 percent of
state pension assets are currently invested in the equity market
in Russia today, compared with about 60 percent in the U.S. and
about 40 percent in the U.K.”

Prime Minister Vladimir Putin, who will take up a third
term as president on May 7, told the Duma — Russia’s lower
house of parliament — on April 11 that the government has to
widen the range of securities that the nation’s pension funds
can invest in, the Prime-TASS news agency reported. “The talk
is about so-called long pension money,” he said, according to
the report.

Only IPO

The government restricted the assets pension funds
contributed to by employers and managed by state development
bank Vnesheconombank can invest in in a Jan. 27 resolution,
government newspaper Rossiyskaya Gazeta reported in February.
The funds can only buy ruble-denominated state securities, after
previously being allowed to invest in state assets denominated
in other currencies, Rossiyskaya Gazeta said, citing the
resolution.

Oil and gas producer RusPetro Plc (RPO) raised $250 million in
London on Jan. 20, the only Russia-based company to do an IPO
this year. Of the five initial share offerings undertaken in
2011, three were done in London, one in Moscow and one on both
exchanges. There were 13 Russian IPOs in 2007, the most since at
least 1999, data compiled by Bloomberg show.

OAO Transneft, operator of Russia’s oil pipelines, and
shipping company OAO Sovcomflot are among companies which may
seek to list outside of Russia this year, according to Azat Nougumanov, a Moscow-based vice president for new business
development at Bank of New York Mellon Corp.

‘Bounce Back Home’

Iron ore explorer OAO Metalloinvest, petrochemical producer
ZAO Sibur Holding, and diamond miner OAO Alrosa may also list
depositary receipts abroad in 2012, Nougumanov said in an April
9 interview. OAO Promsvyazbank is considering a $1 billion IPO
later this year in London and Moscow, President Artem Konstandian, said last month.

The Micex-RTS has dissuaded “a couple” of issuers from
placing shares offshore, Aganbegyan said, declining to provide
more details.

“We’re in quite a unique situation because we didn’t
reform our market over the last 10 years,” he said yesterday.
“Trading equity for such a huge market as Russia outside of
this economy is actually an exception, it’s not a rule, that’s
why the market will naturally bounce back home if that home can
offer a good way of trading for investors.”

Nordgold NV, the Russian gold miner spun off from
steelmaker OAO Severstal in 2012, may consider redomiciling for
a primary listing in London and inclusion in the benchmark
FTSE-100 index, Chief Executive Officer Nikolai Zelenski said in
March.

Volumes Migration

Polyus Gold International Ltd. may apply again to
redomicile in London after Russia’s largest gold company
withdrew its application last month to a government foreign
investment commission, Alexey Chernushkin, Polyus’ director for
capital markets and investor relations, said in an interview on
March 20.

Polymetal International Plc, a silver and gold miner, and
Evraz Plc (EVR), a steelmaker, were the first Russian companies to
join the FTSE-100 in December after moving their main listings
to London.

It will “take time” for trading volumes to migrate from
London to Moscow, Arjun Jayaraman, who manages $400 million in
emerging-market equities at Causeway Capital Management LLC in
Los Angeles, said by e-mail yesterday.

“Buying shares on the Micex-RTS will be much more
attractive with the improved settlement and central
depositary,” he said. “We stopped trading due to the
settlement problems a number of years ago. We will most
certainly come back to the Micex-RTS once volumes pick up,
because there are many stocks that don’t have general depositary
receipts.”

30% Boost

The exchange could boost volumes by 30 percent in the 12
months after the central depositary and settlement time reforms
are implemented, according to Luis Saenz, chief executive
officer of the U.S. unit of Moscow-based brokerage Otkritie
Financial Corp.

A central depositary is an independent body that makes sure
money is paid or debited and securities ownership is transferred
after a trade occurs. The Micex-RTS is in talks with bourses in
Ukraine and Kazakhstan to link their markets with Moscow’s
depositary as a way of broadening investors’ access to assets in
the former Soviet Union, Aganbegyan said.

The Micex-RTS owns 51 percent of Ukraine’s PFTS Stock
Exchange (PFTS) and around 50 percent of the Ukrainian Stock Exchange,
he said.

The 30-stock Micex Index trades shares of Russian companies
including state-run OAO Gazprom, the world’s biggest natural gas
producer, Russia’s biggest lender OAO Sberbank (SBRCY) and OAO Lukoil (LKOD),
the nation’s largest independent oil producer. All three
companies have depositary receipts listed in London and New
York.

The Micex-RTS will seek more than $1 billion in its own IPO
next year “when a market window is there,” Aganbegyan said in
yesterday’s interview. The exchange is allowed to issue a
minimum of $300 million of shares, he said.

To contact the reporters on this story:
Halia Pavliva in New York at
hpavliva@bloomberg.net;
Ksenia Galouchko in New York at
kgalouchko1@bloomberg.net

To contact the editor responsible for this story:
Emma O’Brien at
eobrien6@bloomberg.net

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