The Mechel OAO (Mechel) ADR price rebounded on 25 July 2008, following the company’s assurance that it will cooperate with the Russian government on coal prices. On 24 July 2008, the ADR price fell steeply, following a statement by the Russian prime minister, criticizing the company for its domestic pricing practices and calling for special attention to be paid to its pricing by Russia’s Federal Antimonopoly Service (FAS) as part of an investigation which began on 15 July 2008. Although there is not clear visibility on the outcome of this investigation, we see upside potential from current levels over our investment horizon. Therefore, we temporarily maintain our BUY rating for the ADR. The Russian stock trades in US dollars; therefore, we do not anticipate any currency impact over our investment horizon. Based on our fundamental outlook, we maintain our BUY rating.

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