New Index Welcomed But No Threat to RTS

Stock-watchers can now look to a new index for a broader picture of market movements, following last week's launch of the RMX index by the Moscow Interbank Currency Exchange and Reuters.

The difference between the RMX and other indices is the number of trading floors it covers. The new index is compiled using figures from the RTS and the Moscow Stock Exchange in addition to MICEX.

The RMX is calculated from 32 stocks, with each stock's share in the basket being proportional to its capitalization compared to the capitalization of all the stocks together. Gazprom accounts for 21 percent, Yukos 20 percent, Surgutneftegaz 14 percent, LUKoil 13 percent, Sibneft 19 percent, Norilsk Nickel 5 percent, Unified Energy Systems 4 percent and Tatneft 2 percent.

The companies included in the RMX account for about 80 percent of the capitalization of the entire stock market. The index covers all trading in real time and is updated more than 25,000 times a day. The RMX is calculated in both rubles and dollars.

Outside Russia, Reuters has never before compiled a stock index. Its only similar experiences have been tracking rates on the interbank depository market in Madrid and together with 12 local banks in Mexico. In Russia, Reuters has been compiling indices since 1998, tracking five trading floors, two composite indices and an ADR index. Ricardo Torres, general director of Reuters CIS, said the agency has been working on creating the RMX index for 1 1/2 years.

MICEX deputy general director Alexander Sarchev said the RMX index most accurately reflects the situation on the Russian market. Reuters receives statistics on trading from MICEX, the RTS and the Moscow Stock Exchange in real time and the RMX adjusts with every sale. Stock prices are calculated as the average price for an equity's last 10 trades, no matter where the trades took place. MICEX's share of average trading volume in the RMX equals 97 percent, with the RTS accounting for 2.6 percent and the Moscow Stock Exchange 0.4 percent.

The RTS remains the leading index, although each major Russian bank has its own stock index, as do media agencies. Like the RMX, the RTS is calculated using capitalization figures for the equities it follows. It currently tracks 65 stocks.

The main difference between the RTS and the RMX is that the former does not include Gazprom. United Financial Group analyst Alexei Zabotkin praised the RMX for including Gazprom in its index.

"But like the Dow Jones in the United States, the RTS's position as the main index is not under threat," Zabotkin said.

A Troika Dialog analyst, who wished to remain anonymous, agreed. "The largest brokerages work with the RTS, and to them it will remain the most representative," he said.

According to the deputy head of NIKoil's analytical department, Konstantin Chernov, an index has to go through a stabilization period before it is possible to say how it will fare. In order for an index to become a factor in making investment decisions, the market has to be strong, he added. "An index is used depending on the situation on the market," Chernov said.

Alexei Savatyugin, general director of the RTS-Interfax agency, which also produces a range of indices, called the RMX a competitor.

"The method used to calculate an index is not the only important factor," he said. "Its promotion on the market is also important."