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Stocks in Past Decade Bringing 'Lamentable' Reforms

Russian share sales have been “lamentable” for investors, with more than half of all stocks sold over the last decade underperforming the wider market by more than 10 percent, Troika Dialog said in an e-mailed report Wednesday.

In only two years, 2000 and 2007, stocks that were sold in initial or secondary public offerings outperformed the benchmark dollar-measured RTS Index, the report said.

“Investors should be cautious about the upcoming wave of IPOs,” Troika analysts, led by chief strategist Kingsmill Bond, wrote in the report. “The evidence shows that equity placements have heavily underperformed the market.”

Troika expects about 30 companies to raise $20 billion in equity financing over the next 18 months. United Company RusAl, which raised $2.2 billion in the first Russian IPO of the year, declined 30 percent from its sale price of 10.80 Hong Kong dollars ($139) per share Jan. 26 through Tuesday’s close.

The dollar-measured RTS climbed eightfold from 2000 through 2009 as former President Vladimir Putin strengthened the state’s control over politics and the economy and oil prices advanced. Companies raised $79 billion selling stock in that period, with about a quarter of them, led by Mobile TeleSystems and VimpelCom, gaining more than the RTS, Troika said.

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