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Wednesday, July 6, 2022

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Russia’s Stock Market Resumes After Month-Long Hiatus

By Cristian Bustos. Originally published at ValueWalk.

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The Moscow Exchange partially reopened Thursday after shutting down for a month, with sharp movements by some of the biggest Russian companies. Trading restarted in 33 equities between 3 a.m. and 7 a.m. ET, as announced by the Central Bank of Russia the previous day.

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Market Reopening

As reported by CNBC, the MOEX Russia Index ended the session up 4.37%, and movements included the likes of Gazprom PAO (MCX:GAZP) and Sberbank Rossii PAO (MCX:SBER). Some restrictions include the ban on short-selling, and the foreign investors’ inability to sell stocks or OFZ ruble bonds before April 1.

Some of the best performers include NK Rosneft’ PAO (MCX:ROSN) (16.97%), OK Rusal MKPAO (MCX:RUAL) (15.81%), NK Lukoil PAO (MCX:LKOH) (12.41%), and Norilsk Nickel —GMK Noril’skiy nikel’ PAO (MCX:GMKN)— (10.17%).

The MOEX index stopped trading February 25 after President Vladimir Putin invaded Ukraine, sending shares on a dive. The exchange had lost about 35% of its value in 2022, while the dollar-dominated RTS index had dived by 42%.

As reported by CNN Business, “foreign funds held more than 80% of all shares trading on the Moscow Exchange in the first half of 2021.”

Further Sanctions

According to the media outlet, “the U.S. and Canada accounted for 54% of the total, with 22% from the United Kingdom and 21% from the rest of Europe.”

Stocks dived amid the conflict, and the West sanctions against Russia hit the ruble hard. As further sanctions announced by President Joe Biden are on the way, the country’s economy is in course of a recession with a projected contraction of 5.1% this year and 1.3% in 2023, according to Fitch Solutions.

Biden —who traveled to Brussels from where he will announce further sanctions— said that Russia’s market reopening was a “charade.”

Deputy national security adviser Daleep Singh said in a statement, “Russia has made clear they are going to pour government resources into artificially propping up the shares of companies that are trading.”

“This is not a real market and not a sustainable model —which only underscores Russia’s isolation from the global financial system,” he added.

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