Russian stock market resumes trading under heavy restrictions
Russia’s stock market resumed limited trading under heavy restrictions on Thursday nearly a month after prices fell and the market closed following Moscow’s invasion of Ukraine.
Trading in a limited number of stocks, including energy giants Gazprom and Rosneft, took place under restrictions intended to prevent a repeat of the sell-off that took place on February 24 in anticipation of economic sanctions Western. Strangers cannot sell and traders cannot sell short, otherwise betting prices will fall.
The benchmark MOEX gained 8% in the first few minutes of trading.
The reopening of stock trading on the Moscow Stock Exchange has little impact on investors outside Russia. Its market capitalization is a fraction of that of major Western or Asian markets.
Foreign investment managers lost a reason to buy Russian stocks after MSCI Inc. declared the market “uninvestable” following the February 24 Russian invasion and removed it from global indices.
Hundreds of American, European and Japanese companies have withdrawn from Russia.
There have been bank runs and panic buying of sugar and other commodities. The Russian ruble exchange rate fell.
Foreigners are not allowed to sell stocks under rules imposed to counter Western sanctions against Russia’s weakened financial system and currency.
Trading will be allowed in 33 of the 50 companies that are part of the MOEX index, including air carrier Aeroflot, state gas producer Gazprom and oil giant Rosneft, according to a central bank announcement.
The shares were last traded in Moscow on February 25. A day earlier, the MOEX fell 33% after Russian forces invaded Ukraine.
The Moscow exchange had a market capitalization of around $773 billion at the end of last year, according to the World Federation of Exchanges. This is dwarfed by the New York Stock Exchange, where the total of all stocks is around $28 trillion.
Russia’s central bank this week restarted trading in ruble-denominated government bonds.
The central bank estimates that around 7.7 trillion rubles, or now around $76 billion, of Russian stocks belonged to retail investors at the end of 2021.
The Russian government could step in to support its businesses and investors. Prime Minister Mikhail Mishustin said on March 1 that the country’s National Wealth Fund would buy up to $10.2 billion worth of Russian stocks by the end of the year.
Before the war, foreign investors showed growing interest in Russian stocks as an opportunity for emerging markets. But about a week after the start of the war, Russia was removed from the emerging market indices compiled by MSCI, a division of Morgan Stanley.
MCSI said that after consulting with a large number of asset managers, it determined that the Russian stock market was uninvestable. This removed a primary incentive for fund managers to invest there.
On March 3, the London Stock Exchange suspended trading in the shares of 27 companies with ties to Russia, including some of the largest in the energy and financial sectors.
The shares lost most of their value before the suspension.
Shares of Rosneft fell from $7.91 on February 16 to 60 cents on March 2. Sberbank plunged from $14.90 to 5 cents.