The move comes in response to the wild fluctuations of the ruble-based Moscow Times Index in recent weeks, which brokers and experts say has been driven by changes in the ruble's exchange rate against the dollar rather than by real movement in the stock market.
Russian stock prices tend to act as if they were pegged to the dollar because the market is dominated by foreign investors, who trade in dollars and usually value privatized companies' assets in dollar terms. Thus, when the ruble's value against the dollar falls, the ruble-based index tends to rise, and vice versa.
"Because of wild fluctuations in the ruble rate, a lot of the index's daily fluctuations could be misleading for dollar investors," said Sergei Skatershchikov, co-director of the Skate- Press Consulting Agency, which compiles the index. "I think that the most important impetus for the dollar-adjusted index is to provide a stripped picture of stock market performance for those investors who handle all their trades in dollars."
On Thursday, for example, the index plunged 26.84 points to 139.93, while the dollar-adjusted index rose 4.63 points to 103.01. The difference between the two corresponded closely to the ruble's near 25 percent rise against the dollar that day.
"As soon as the ruble was up, ruble prices calculated from dollar prices went down and the index fell dramatically," said Skatershchikov.
Since the dollar-adjusted index is not based on actual dollar stock quotations or trades, but is only a derivative of the main index, it should not be taken as an indicator of the dollar prices of stocks in the main index. Like the ruble-based index, the shadow index takes its starting point as 100 on Sept. 1, 1994.
The main MT Index reflects the growth in the total market capitalization of 30 leading Russian stocks as expressed in rubles. It is calculated by averaging the buy and sell quotations of more than 40 Russian brokerages.
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