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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (9687)	7/22/2004 12:10:50 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Russian Markets Tumble on Yukos Grab Combined Reports Stocks tumbled Tuesday after the Justice Ministry said oil giant Yukos' main production unit will be seized and sold to pay a $3.4 billion tax bill. The dollar-denominated Russian Trading System Index, which on Monday passed the 600 mark for the first time in a month, dropped more than 3 percent to 585. The more liquid, ruble-denominated MICEX shed nearly 4 percent to 533, its steepest drop in nearly a month. Shares of Yukos fell as much as 17 percent and closed down 13 percent at $6.80 on the RTS. Trading in Yukos was halted for one hour on the MICEX after the stock dropped 16 percent. Court marshals on Monday began evaluating Yuganskneftegaz, which accounts for about 60 percent of Yukos' output and 12 percent of Russia's production. The Justice Ministry said shares of the subsidiary will be transferred to a special firm for sale after evaluation. "This is scary. If you sell Yuganskneftegaz, you are basically selling Yukos," Jean-Louis Tauvy, who manages $200 million including Yukos shares at Atria Advisers. "Yukos would become a very, very small company." Yukos said last week it would pay as much as $1.3 billion in cash on the tax bill dating to 2000 by the end of July, including the waiver of a claim for rebates on value-added taxation. Tax authorities have also sent Yukos a $3.4 billion tax claim for 2001. A quick sell-off of Yukos assets would damage Russia's investment climate, investors said. "This would be equivalent to the domestic default in 1998," said Tim McCarthy, who manages $500 million at Troika Dialog Asset Management. "The company was worth about $45 billion and now it is worth virtually nothing." Shares of Gazprom, a bellwether for the market, dropped 3.5 percent to 61.80 rubles ($2.10). Shares of national power utility Unified Energy Systems dropped nearly 4 percent to 25.6 cents. UES said Tuesday that its 2003 earnings to international accounting standards fell 25 percent to $928 million on deferred tax charges. UES said in a statement that 2003 revenue rose 18 percent to 593.1 billion rubles ($20.4 billion). moscowtimes.ru