First place in the east European ranking that was won last year by Lukoil, the Russian oil company, this year goes to Tpsa, the Polish telecommunications group.

The telecoms operator, in which France Telecom last year acquired a strategic stake, pushed its way to the top despite the general global decline in the valuation of telecoms stocks. It succeeded because, in a general sell-off of emerging market equities, Russia suffered more than most after seeing exceptional gains in 1999.

However, with commodity prices still strong by the standards of most of the 1990s, Russian energy and metals companies figure prominently in the upper reaches of the table. None more so than Yukos, the oil group, which leapt from 58th position to seventh, following extensive reorganisation. Surgutneftegaz, which performed a similar jump in 1999, also climbed up the ladder to second place, one ahead of Lukoil.

Analysts say that both Lukoil and fourth-placed Gazprom, the gas monopoly, would achieve much higher valuations if they increased their standards of corporate transparency. They would then rank among the world's biggest companies by market value.

Altogether, eight of the top 10 Russian companies are energy groups. By contrast, the non-Russian companies are a mix of telecommunications groups, utilities and banks, with a sprinkling of representatives from other industries. After Tpsa come the Czech and Hungarian telecoms operators, Cesky Telecom and Matav, followed by Poland's Bank Pekao, the top-rated bank in which Unicredito of Italy has a strategic investment.

Among manufacturers, Pliva, the Croatian pharmaceuticals group, comes first, at number 17, followed by Richter Gedeon, the Hungarian drugs group, at 20. Agora, the Polish media company, stands between them in 18th place, up seven positions, with a market value of $1.2bn.

0Top 20 Eastern European companies by market capitalisation

	Company	At January 4 2001	Mkt cap ($m)	Sec
1	Telecomunikacja Polska		9,582.6	673
2	Surgutneftegaz		7,395.3	78
3	Lukoil		6,829.8	78
4	Gazprom		6,817.8	78
5	Cesky Telecom.		4,399.0	673
6	MATAV		4,221.5	673
7	Oil Company YUKOS		3,981.9	78
8	Unified Energy System		3,250.5	720
9	Bank Pekao		2,679.3	673
10	Mobile TeleSystems		2,379.5	810
11	PKNorlen		2,253.9	78
12	MOL		1,807.4	4 78
13	CEZ		1,600.7	720
14	OTP Bank		1,548.1	810
15	Sibneft		1,270.7	78
16	Norilsk Nickel		1,263.1	186
17	PLIVA		1,210.2	480
18	Agora		1,205.4	547
19	KGHM Polska Miedz		1,169.9	186
20	Richter Gedeon		1,088.9	480
Source: Thomson Financial Datastream

Lower in the tables comes a smattering of IT companies, including Prokom Software and Softbank of Poland and Graphisoft from Hungary.

The Baltic states are well represented, given their small size, with Eesti Telekom, the Estonian telecoms group, standing at 30th in the list. Its recently-privatised Lithuanian counterpart is at 40 and the top-ranked Latvian group, Latvijas Gaze, at 62.

The Balkans figure less prominently, excepting Croatia. The only Romanian group, Alro Slatina, the aluminium smelter, stands at a lowly 86, and there is no room for companies from other south-east European states such as Bulgaria.

The dominance of certain industries - natural resources in Russia and banking and telecoms groups elsewhere - poses problems for investors seeking diversification.

Also, listed companies are often under the control of big investors with strategic stakes they do not wish to sell, leaving relatively little stock for financial investors. In Russia, the strategic investor is often a dominant businessman, or oligarch, and his partners. Elsewhere, multinational groups are prominent. In many countries, the state remains a significant shareholder, even in privatised companies. The Russian government, for example, still controls 38 per cent of Gazprom.