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HIGHER RATING NOT ENOUGH TO PACE UP RUSSIA'S STOCK MARKET PROGRESS, WARN EXPERTS

MOSCOW, January 31 (RIA Novosti's Elena Orekhova) - Russia's third investment rating has given its stock market a necessary but insufficient impetus.

Standard & Poor's has given Russia an investment rating. Experts regard it as the day's principal event. Russian blue chips immediately came 1% to 4% up due to it alone. The Russian Trading System came 5 points up.

Russia previously had two investment ratings. Moody's upgraded its sovereign rating to BBB-, October 8, 2003. Fitch followed, November 18, 2004. S & P is thus a third transnational rating agency to send its sovereign rating from speculative to investment.

The big event was no thunderbolt, so Russian stock rose for only a short time, and moderately.

S & P was fairly approving of the Russian social welfare reform, Friday, in a prelude to the investment rating announced today.

"A rise in a presentiment of good news, a fall coming quite soon, is the usual market practice," remarked Yuri Rosikov, Eurofinance investment company analyst. The S & P news had only "a minimum surprise effect", he added.

We should not expect a sizeable downward correction, what with a "moderately bullish" mood in the market now. "Western investors are re-appraising their interests in Russia against this background," says Igor Rubin, Metropol investment company trader.

It is too early now to assume the Western business world's unquestioning confidence in Russia, what with numerous disputable points, which come as obstacles too hard to overcome. All experts agree on that. Even S & P is offering formidable provisos as it substantiates its investment rating.

Upgraded ratings reflect a big recent improvement of national debt and foreign liquidity indices. These improvements are sizeable enough to balance off major political hazards, which are growing and remain principal factor to limit Russian ratings, says Helena Hessel, S & P credit analyst.

Vague government-business relations ate the main reason for investors being very cautious about their activities in Russia, point out experts.

"The door is open to conservative Western investors-but that does not radically change the situation," says Mr. Rosikov. "If fiscal agencies' activities are set into order, that will really determine final decision on whether to buy Russian stock or not."

Too many affairs are controversial-suffice it to mention the Yukos plight and Gazprom liberalizing its stock market-to expect seething activities, warns Yevgeny Shago, Region corporate group analyst. He does not think a major capital inflow will come, as was the case in 2002-03.

However, as experts analyze this year's Russian stock market trends, they forecast a big rise of the RTS index, Russia's basic. It was at its highest today since the year's start, 640. Yuri Rosikov expects it to rise by 20-25 per cent, roughly to 750, throughout the year-the market has enough money for that, though no rise will come February, to all appearances.