As of: 03/21/2022 6:34 p.m
Almost a month after trading was suspended, the Moscow exchange has resumed trading in certain Russian government bonds. Shares can no longer be bought there.
Prices plummeted around the world after Russian troops invaded Ukraine. But no stock exchange has been hit as hard as the Moscow Stock Exchange. Not only did the ruble plummet, shares in Russian corporations such as Gazprom & Co. also reacted to the harsh sanctions imposed by the West.
The Russian central bank was forced to suspend trading completely. Felix Hüfner, Chief Economist for Germany & Europe at UBS Bank, explains that this is a measure with a huge impact on Russian companies: “On the one hand, there are problems that companies that need capital are not getting it at the moment. Other companies will also postpone investments .If you don’t know exactly when you can get capital again and at what price, then you postpone investments.”
“Dear Stock Market, Rest In Peace”
Added to this are the western economic sanctions against Russia. Because many companies have put their business in Russia on hold or withdrew completely. The consequences can also be seen in the performance of the ruble. Since the start of the Ukraine war, the Russian currency has plummeted, depreciating around 30 percent against the dollar and euro.
The mood is bad – also among many stock market professionals in Russia. A television appearance by a stockbroker on state-affiliated Russian television, toasting the death of the stock market, made headlines. In Russian he said: “Dear stock market, rest in peace.”
Western stock exchanges ban trading in Russia stocks
Almost four weeks after the suspension of stock exchange trading, the Moscow stock exchange was at least partially opened today. As of 1 p.m. local time, certain government bonds issued by the Russian government may be traded again. A spokesman for the stock exchange said that it was hoped that stock trading would resume soon. “Technically everything is prepared for this,” he told the BBC.
It remains unclear when Russian shares can be traded in Moscow again. Trading in Russian shares also remains suspended on other stock exchanges such as London or Frankfurt. Papers from the energy giant Gazprom or Sberbank had fallen by more than 90 percent. Also because Western investors fear that they will no longer be able to dispose of their shares in view of the sanctions.
Detour via certificate trading
Even if stock trading were allowed to start again, Russian stocks would remain unattractive, says capital market strategist Stefan Risse from Acatis: “The danger for investors in Germany, for example, is that you’ll just be stuck with these Russian stocks. You have them, you can buy them possibly even have the original shares delivered, but where to sell them? That’s the big question.”
Investors now have to wait and see. There is also a problem in this country: securities of Russian companies are often not sold directly, but as certain certificates, so-called ADRs.
Low trading volume in Eastern Europe
Russian investors have few alternatives – even if shares are traded again in Moscow – says Alexander Libman, a professor at the East European Institute at Freie Universität Berlin: “If the sanctions stay in place for a long time, as we saw in the case of Iran, then they will Russian investors are increasingly investing their money in local stocks – simply because they have no other alternatives.”
After the longest stock exchange closure in Moscow to date, this would at least strengthen the domestic stock exchange. But one thing is also clear: In general, the music is playing on the international financial markets of the USA and Europe. This is also shown by the low trading volume in Eastern Europe.