Shares rose in Russia as the Moscow stock exchange partially reopened following a trading suspension of more than three weeks after sanctions sent equities into freefall.

The benchmark Moex index was up more than 11 per cent in morning trading with shares changing hands in Moscow for the first time since February 25.

Trading resumed in 33 of the 50 stocks that make up the Russian equity benchmark, including Gazprom, Sberbank, Rosneft and VTB Bank, for a shortened trading session running from 9:50am to 2pm Moscow time.

The resumption of trading comes days after Russia’s central bank took its first steps to settle billions of dollars worth of equity trades by international investors that had become trapped when Vladimir Putin introduced capital controls on February 28.

Many restrictions remained in place even after the bourse reopened. Short selling was banned and while local investors were allowed to trade relatively freely, foreign investors were unable to exit the market.

And while trades could be settled in both US dollars or roubles, foreign investors were still forbidden from selling shares until April 1. All money must also remain in Russia even after investors cash out.

The Moex gains on Thursday still left the stock benchmark down about 28 per cent this year, while Russia’s rouble has fallen more than a fifth against the dollar over the same period.

The country’s central bank has taken expansive measures to combat financial instability caused by western sanctions imposed on Russia, including raising its benchmark interest rate to 20 per cent at the end of February.

Last week, the central bank kept rates at that level as it sought to evaluate the impact of the dramatic tightening on Russia’s economy.

“The key argument in keeping the rate unchanged was that the much higher policy rate has broadly helped stabilise the financial system via making it less advantageous to withdraw money from the banks,” said Ivan Tchakarov, an analyst at Citigroup. “The next task the [central bank] is facing is managing inflation expectations and the anticipated surge in price growth.”

On Wednesday, analysts at S&P Global Market Intelligence warned that Russia faced its “deepest recession since the 1990s”, predicting that gross domestic product would tumble 22 per cent in 2022.

They added that real GDP “is not expected to regain its 2021 peak until the 2030s”.

Unhedged — Markets, finance and strong opinion

Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here to get the newsletter sent straight to your inbox every weekday

Source link


Please enter your comment!
Please enter your name here