Russian Stock Market Closed for the Fourth Day Due to War in Ukraine Issues – The Russian stock market will stay closed for a fourth consecutive day, according to a statement from the Russian central bank.
It comes as Russia faces continued serious financial woes, with Russian citizens lining up to withdraw their savings from major national banks across the country and sanctions from the United States and Europe putting major pressure on oligarchs and businesses alike.
Late on Wednesday, the Bank of Russia said that stock and derivatives will not continue trading on the Moscow Exchange on Thursday, with very limited exceptions.
Russia “Uninvestable”
U.S. finance company and index compiler MSCI Inc. announced on Wednesday that Russian stocks would be removed from its influential indexes that track emerging markets. The decision was made as a result of the closure of the Moscow Exchange, which stopped global investors from being able to sell their Russian holdings.
In a statement, the firm said that asset owners, asset managers, broker dealers, and major exchanges have said “with an overwhelming majority” that the Russian equity market has become entirely uninvestable.
Russian securities will on March 9 be moved to a “Standalone Market” category as opposed to “Emerging Markets.”
“Russia will be deleted from all FTSE Russell Equity Indices effective from the open of Monday, March 7,” the statement said.
Investors “Trapped” In Crashing Market
The decision to close the Russian stock market was one of several moves made by the Bank of Russia designed to protect its currency. On Monday, the central bank raised interest rates from 9.5% to 20% in response to the value of the ruble crashing. The Bank of Russia also resumed purchasing gold on the domestic market.
By the third day of the closure of the Russian stock market, it was the longest closure since October 1998.
Britain’s Telegraph newspaper also reported that over £1 billion in investors’ money was trapped in Russia after JP Morgan and other asset managers suspended funds operating in the Russian stock market.
Investors are effectively locked into the crashing Russian market, with the KPM Emerging Europe Equity, JPMorgan Russia Equity and JPMorgan Emerging Europe Equity Funds all suspended indefinitely.
List of sanctions on Russia
Banks and financial services
Russia’s central bank: The EU already prohibits the “direct or indirect trade in investment services for . . . securities and money-market instruments issued after April 12, 2022.” In addition, the US, UK, Canada and the EU seek to “impose restrictive measures that will prevent the Russian Central Bank from deploying its international reserves in ways that undermine the impact of our sanctions”.
Swift: A “select” number of Russian banks will be removed from the Swift international payments system to “ensure that these banks are disconnected from the international financial system and harm their ability to operate globally”, the US, UK, Canada and EU said in their joint statement Saturday. The banks are yet to be identified.
Sberbank: The US has cut off Russia’s biggest bank and 25 subsidiaries from the US financial system. The sanctions restrict Sberbank’s access to US dollar transactions. The financial institution accounts for close to a third of Russia’s banking system and is very connected to the global financial system.
VTB Bank: The US and the UK have frozen assets at Russia’s second-largest bank, which is heavily exposed to western financial systems. This means the bank and its subsidiaries will not be able to do any business in the UK or US or with their nationals.
Alfa-Bank and Bank Otkritie face an EU ban on issuing bonds, shares or loans in the EU for refinancing, while the US has imposed debt and equity restrictions on Alfa and full blocking sanctions on Otkritie.
The EU and the UK have imposed asset freezes on Bank Rossyia and Promsvyazbank. The US has also imposed full blocking sanctions on Promsvyazbank.
The US has issued full blocking sanctions against Sovcombank and Novikombank, while placing new debt and equity restrictions on Russian Agricultural Bank, Credit Bank of Moscow and Gazprombank.
Is Bank, Genbank and Black Sea Bank for Development and Reconstruction have been placed under sanctions by the UK.
VEB.RF, a major financial development institution and an important source of revenue for the Russian government, has been put under sanctions by the EU. It was already on the US and UK lists.
Belarus banks: The US imposed sanctions on two state-owned banks, Belinvestbank and Bank Dabrabyt, in response to Minsk’s participation in the Russian invasion. Additionally, two Minsk-based companies — real estate group Belinvest-Engineering and financial leasing company CJSC Belbizneslizing — are being listed for having acted on behalf of Belinvestbank.
Companies
UK
- Russian airline Aeroflot will be banned from UK airspace.
- Rostec — Russia’s largest defence company
- Uralvagonzavod — the world’s largest tank manufacturer.
- Tactical Missile Corporation — a major supplier of air and seaborne missiles.
- United Aircraft Corporation — a Russian holding company that supplies military aircraft and includes all major Russian aircraft manufacturers.
- United Shipbuilding Corporation — the largest shipbuilding company in Russia, which has constructed key Russian warships.
EU
- EU-based companies are banned from exporting technology to Russian weapons maker JSC Kalashnikov, among others, as well as pharmaceutical companies, military communications units and shipyards.
- EU companies are banned from doing business with the following state-owned companies: arms maker Almaz-Antey, truckmaker Kamaz, Novorossiysk Commercial Sea Port, defence company Rostec, Russian Railways, nuclear submarine maker Sevmash, hydrocarbons shipping company Sovcomflot and the country’s largest shipbuilder United Shipbuilding Corporation.
- Internet Research Agency — a Kremlin-backed company that is behind Ukraine disinformation campaigns and financed by Yevgeny Prigozhin, is also banned.
US
In addition to targeting Russia’s largest financial institutions, the US has heavily restricted companies critical to the country’s economy from raising money through the US market. These include:
- The world’s largest natural gas company, Gazprom, one of Russia’s largest oil producers and refiners, Gazprom Neft, oil pipeline company Transneft and one of Russia’s largest power companies, RusHydro.
- Russia’s largest maritime and freight shipping company, Sovcomflot, and one of the world’s largest railroad companies, Russian Railways.
- The country’s largest communications operator, Rostelecom, and the world’s largest diamond mining company, Alrosa.
Other measures
UK
- Restricting wealthy Russians’ access to UK banks, including a £50,000 limit on bank accounts.
- Asset freezes against all Russian financial institutions.
- Measures to prevent Russian companies from issuing transferable securities and money market instruments in the UK (in addition to prohibiting the Russian state from raising sovereign debt in the UK).
- Powers to prevent designated banks from accessing sterling and clearing payments through the UK.
- Prohibiting the export of high-end and critical technical equipment and components in sectors including electronics, telecommunications and aerospace.
- The territorial sanctions that the UK has imposed on Crimea will be extended to Donetsk and Luhansk, meaning no UK individual or business can deal with the territories until Ukraine controls them again.
EU
- A ban on Russian deposits above €100,000 in EU banks, on Russian accounts held by EU central securities depositories and on selling euro-denominated securities to Russian clients.
- A ban on listing the shares of Russian state-owned entities on EU trading venues.
- A ban on the sale, supply, transfer or export to Russia of technologies in oil refining and restrictions for related services.
- An export ban on all aircraft, spare parts and equipment to Russian airlines, as well as to the Russian space industry. This includes a prohibition on insurance and reinsurance and maintenance services.
- Further restrictions on the export of dual-use goods and technology, including semiconductors.
- Diplomats, Russian officials and business people will no longer be able to benefit from visa facilitation provisions, which allow privileged access to the EU.
US
- The US has restricted the export of high-end US technologies to Russia, targeting its defence, aerospace and maritime sectors in a bid to deprive its military from western technology.
- It has also issued broad, sweeping restrictions on products including chips and computers. Its new measures affect exports to Russia from outside of America if they are made using US technology.
- Exemptions from the restrictions exist for international organisations, pandemic-related deliveries, overflight and emergency landings, the energy sector and dealings in certain debt or equity and derivative contracts.