RUSSIAN BLUE CHIPS: FORMATION, DEVELOPMENT,

PROBLEMS & PROSPECTS

PLEKHANOV RUSSIAN UNIVERSITY OF ECONOMICS

Group 5202:Rzaev AbirKholoptcev DanielTitova EkaterinaDubinin AlexanderFedortcov Pavel

is stock in a corporation with a national reputation for quality,

reliability and the ability to operate profitably in good

times and bad.

A blue chip -

An interesting fact is that blue chips came to the stock market from casino – chips of such color have the highest cost in the game.

Usually blue chips are the indicators of all the market,

because if prices for shares of largest companies increase, than

stocks of “secondary“ organizations will also rise.

Selection criteria:

the amount of stock in free float accounting transparency growth rate stability of dividend payouts free sell of stock on the regulated markets profitability net assets trade turnover presence of vacant jobs interest of investors.

USB Financial Services, Inc. chose companies that have at least four of the six following characteristics to be considered a

blue chip:rated by the sponsor;

market capitalization in excess of $5 billion;

financial strength, a record of profit growth and reputation for skilled management;

established, well-known company considered to be stable and mature with a reputation for providing high quality goods and services;

leader in its market niche.

In addition, companies are analyzed for their record of earnings over a relatively long period of time and future potential.

Other terms that are often used in conjunction with blue chip include “Bellwether" and "Market Capitalization."

Bellwether is a term used to describe a company that is recognized as the leader in its industry.

Market capitalization is simply calculated by taking the number of shares outstanding and multiplying by the stock's current price per share.

As the blue chips form their stock price become the determinant of stock indexes:

MICEX (Moscow Interbank Currency Exchange -

established in 1992, the most liquid and best organized financial exchange in Russia.)

RTS (RTS Stock Exchange)

Development

Development

Development

1. blue-chip companies are not necessarily blue-chip investments

2. ‘’large'' and ''high quality'' are not synonymous

Problems:

Prospects:

At the moment is "blue chips" are the most stable, liquid, transparent and safe for investors in shares in the Russian market.

Most of the time "blue chips" have steadily increased, especially in a

growing market (such as the Russian stock market). For example:

over the past 5 years (from 2002 to 2007) Sberbank rose by 40 times or 4000%.

UES (The Uralenergo-union) shares for 5 years, rose in price by more than 700% (or more than 7 times)

shares of "Lukoil" increased in value by almost 600% (or 6 times).

Analyst’s estimate that from 2002 to 2007, shares of "Lukoil" every rose in price by an average of 47%.

"Blue chips" - shares of the most stable and expensive companies that from year to year show an increase in value.Shares of major Russian companies grow slowly but surely.Main feature of "blue chip" is their reliabilityIn the long term positive tendency, value of the shares grows (without speculation)Oil companies – the most promising among blue chipsWith the growth and modernization of an economy comes the decrease in blue chip value.Little risk of bankruptcy and as a consequence of the collapse of value because blue chips well-known and established companies, the foundation of the Russian economy. Of course, if it is not a crisis.

Conclusions and facts:

Thank you for attention!