Thursday, March 24, 2022

Russian stock market reopens after monthlong shutdown

Russia’s stocks moved sharply on Thursday, as the market partially reopened for limited trading after its longest shutdown since the fall of the Soviet Union.
  • The Moscow Exchange resumed trading in 33 Russian equities, including some of its biggest names like Gazprom and Sberbank, between 10 a.m. and 2 p.m. Moscow time (3 a.m. and 7 a.m. ET) following an announcement from the Central Bank of Russia on Wednesday.
  • Oil giants Rosneft and Lukoil jumped 16.97% and 12.41%, respectively, while aluminum company Rusal climbed 15.81%. Norilsk Nickel gained 10.17%.
  • Short-selling on stocks was banned and foreign investors will not be able to sell stocks or OFZ ruble bonds until April 1.

There's a Russian story dating back to the 18th century that tells the tale of Empress Catherine II's visit to Crimea. Allegedly, a governor named Grigory Potemkin would build fake villages to hide the true state of the area. The name stuck. And now a "Potemkin village" suggests the effort to conceal what's really going on.

That's the reference Deputy National Security Advisor Daleep Singh used to describe the reopening of Russia's stock market. Now, it has opened with some caveats. Short selling and sales by foreigners are banned. The market is only open four hours per day. And the state wealth fund planned to invest $10 billion into local stocks. Whether the full amount has been invested is unclear.

The price action had been so severe that the benchmark index now trades with a price-to-earnings ratio of 3. For context, the S&P 500 trades at a multiple of 23. While the market was closed, the ruble also weakened 16% masking some of the index's pain. Keep an eye on this index to see how sustainable Russian efforts to prop up the market can be.

A man walks past Moscow’s stock market building in downtown Moscow on February 28, 2022.
Natalia Kolesnikova | Afp | Getty Images
The country’s stock exchange had been closed since Feb. 25 as Russian assets plunged across the board following the country’s invasion of Ukraine and in anticipation of the punishing international sanctions that followed.

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