The Russian stock market will be closed for trading until at least next Wednesday, marking a record high in the country’s modern history, in a continued effort to avoid the impact of global sanctions for domestic investors.
The Moscow Stock Exchange said on Friday that trading in all markets would be closed on March 5, 7 and 8. , global index providers announced plans to remove domestic stocks from their indexes, and European companies with business exposure to the country lost more than $100 billion in market value.
The Russian ruble fell 8.6% to the dollar at the Moscow open, before narrowing the decline to 1.4% at 107.50 at 10:21 a.m., down 23% for the week. Russia on Friday morning banned short selling in euros on its money and stock markets, the stock exchange announced.
Following international sanctions over Russia’s invasion of Ukraine – which affected everything from its ability to access foreign exchange reserves to the SWIFT banking messaging system – uncertainty gripped Russian markets in all asset classes, with many investors deeming the nation “uninvestable”. Russia has promised to step in and support the stock market with up to $10 billion when it reopens.
The reaction to Russian stocks when they reopen will likely be “negative unless the government and central bank step in to buy stocks. “Sell orders are mostly coming from overseas,” said Cristian Maggio, head of portfolio strategy at TD Securities in London.
The fall in foreign-listed shares of Russian companies is an indicator of the reaction of local equity investors to the resumption of trading in Moscow. The London Stock Exchange on Thursday suspended trading in dozens of Russian certificates of deposit, citing the war in Ukraine and market conditions. MSCI Inc. and FTSE Russell announced on Wednesday that they would cut Russian stocks from widely followed indexes.
Meanwhile, several exchange-traded funds have also been suspended following the events. Stock creation for the VanEck Russia ETF, the largest ETF investing in Russia, has been halted until further notice, effectively halting inflows into the fund. BlackRock Inc did the same with its iShares MSCI Russia ETF, among several other companies.
Although a rare occasion, countries have halted stock trading in the past due to unusual circumstances.
The New York Stock Exchange, London Stock Exchange and other exchanges were closed in 2001 after the September 11 attack. Trading in US stocks resumed after being closed for four trading days, with the S&P 500 falling about 5%.
The Egyptian stock exchange was shut down for nearly two months in early 2011 amid protests that toppled the 30-year-old regime of President Hosni Mubarak. The shutdown followed a 16% plunge in the country’s stocks in just two days. And when the index reopened, the selling resumed and the index ended up down 49% for that year.