Virtually all Russian IT and telecom companies saw their capitalization shrink on stock markets in 2011, with telematics company Russian Navigation Technologies (RNT) and Russian microelectronic device maker Sitronics losing more than 40%. AFK Sistema, a diversified conglomerate, lost as much as 33.8%. Major mobile operators VimpelCom and MTS did barely any better with a loss of 37.7% and 29.1%, respectively.
Utinet.ru, the only Russian online retailer listed on a stock exchange, ended the year at 160 rubles, approximately $5, down 18% from its July 2011 IPO offer price of 195 rubles, or approximately $7.
On the NASDAQ, Yandex, the Russian search giant, fell to an historic low of $17 per share in mid December, far below its initial offer price of $25 in May, not to mention its peak of $42.01, which was reached immediately after the IPO. However, the Yandex share price began to show signs of recovery in the last days of December and the beginning of this year.
On the London Stock Exchange, Mail.ru Group ended the year at around $26 per share, compared to a high of $44 in mid January 2011. Its share price at the end of 2011 was close to its IPO offer price, around $25 in October 2010.
Rostelecom, the national telecom operator, was one of the rare exceptions to the downward trend. Rostelecom completed a large scale merger and reorganization process during 2011 and its stock ended the year approximately where it started – at around 155 rubles, or $4.85, on MICEX, one of the Moscow stock exchanges, and $28 on the London Stock Exchange, following a sharp rise and fall in the middle of the year.
Russian IT and telecom companies lost 23.3% on average in 2011, notes CNews.ru, an online publication covering Russian telecom and IT markets.
This poor stock performance is related to macroeconomic, or even political factors, not necessarily to the individual situations and perspectives of the companies.
The MICEX stock index fell by 16.93% during the year, strongly affected by withdrawals of foreign investors. December results were particularly disappointing, when many foreign investors perceived the post-election political turmoil in Moscow as a potential threat to the country’s stability.
Update Jan. 12, 2011
Yandex gained 1.8 percent to $19.20 in New York after Goldman Sachs raised its recommendation on the stock to “buy” from “neutral” and listed the company as one of the “best buy ideas” in the European media and telecommunications industry, Bloomberg reported today. Yandex is among companies that are “in the top quartile among the European media companies as they benefit from exposure to structural growth themes and economies that are expanding faster,” Goldman analysts said.
American depositary receipts of MTS advanced 3.4 percent to $16.27, a five-week high, after Goldman Sachs reiterated its “buy” recommendation on the stock, also making it one of its “best buy ideas.”
