- The London Stock Exchange on Thursday suspended trading in Russian stocks after some plunged as much as 99% this year.
- Russia’s central bank said the Moscow stock exchange would remain closed for the fourth day in a row.
- Global investors have rushed to dump Russian assets as the war in Ukraine rages and Western sanctions hit hard.
The London Stock Exchange has suspended trading in a number of Russian companies after their shares plummeted by up to 99% following the conflict in Ukraine and subsequent Western sanctions.
Meanwhile, Russia’s central bank said Moscow’s main stock market would remain closed for a fourth day as US financial institutions labeled the country’s assets “uninvestable”.
The London Exchange noted it would end trading in the certificates of deposit of a number of large Russian companies, including Sberbank, the country’s biggest lender, and energy giants Gazprom and Lukoil. Certificates of deposit are certificates that represent foreign stocks.
Russia invasion of ukraine last week unleashed chaos on the country’s markets, with Moscow’s MOEX stock index plunging as much as 50% in one day.
Russia’s central bank has ordered the stock market to remain closed this week, seeking to avoid another price crash. His government has asked the sovereign wealth fund to release up to $10 billion to support the market when it reopens.
However, the Moscow market shutdown has not stopped global investors from dumping any companies with Russian ties.
On Wednesday, Sberbank crashed as much as 95% on the London Stock Exchange down to $0.01, taking its losses for the year to over 99%. Gazprom plunged up to 97% and Lukoil fell 95%.
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The London Stock Exchange announced on Thursday that it was suspending trading in more than 20 companies, “following recent sanctions related to events in Ukraine, in light of market conditions and in order to maintain orderly markets.”
Overnight MSCI, a power in the world of stock indices, noted clients had told him that the Russian stock market “was currently uninvestable”.
He said he was therefore reducing Russian stocks from his closely-watched emerging market indices, which could significantly reduce the amount of investment going into Russian companies.
MSCI said it would move stocks to new standalone indices “at effectively zero price.” FTSE Russell, another leading indexing firm, said it would also remove Russian stocks from its benchmark indices.
The United States and its allies have imposed severe financial sanctions on Russia, including cutting off some of its
out of crucial SWIFT global payments messaging system.
Western governments have also restricted the ability of the Bank of Russia to use its foreign exchange reserves to circumvent sanctions. The United States prevented Americans from engaging in transactions with the central bank.