The Bank of Russia has officially announced the reopening of its stock market. As of this Thursday, 33 companies on the Moscow stock exchange will be listed again, after almost a month in which the country’s main stock index has been closed. Moscow decided to close its stock market on February 28, in the midst of a stock market crash that took away a third of its capitalization in a few days after the invasion of Ukraine.
Russian stock exchange giants Gazprom and Sberbank are among the companies set to re-list on Thursday. Some analysts already anticipate a possible rebound on the first trading day, arguing that the Russian authorities will support their market. As explained by Bloomberg, Russia would already have 10,000 million dollars from its sovereign fund to buy shares of the companies on its stock market.
In addition, the Bank of Russia has vetoed the possibility of shorting some of the main companies on its stock market, with the intention of avoiding taking advantage of further falls that occur in these values.
Liquidation value
With the opening of the stock market, the managers that have Russian equity funds or emerging European stock funds, which have a large exposure to the market of the Eurasian country, will be able to resume the calculation of the net asset value of their vehicles.
But this does not mean that reimbursement orders will be able to be processed normally and immediately, since the conversion of rubles to dollars or euros also makes this operation difficult, taking into account that the Russian currency has suffered a 20% drop since the middle February against the European currency. And we must take into account the issue of sanctions imposed by Western countries on Russia.
Pictet, BlackRock, HSBC, Raiffeisen and JP Morgan are some of the managers that presented relevant facts to the regulator to communicate the suspension of the net asset value and of the subscriptions, redemptions and exchanges of shares of their funds in these categories to protect the investor, among those that are BlackRock Emerging Europe Fund or Pictet Russian Equities, the Russian stock market fund that managed the largest asset volume, with 567 million euros.
Depending on how the Russian stock market behaves in the coming days, supported by the country’s authorities, it will be easier to carry out the reimbursement operation that is likely to take place, in funds that suffer very significant losses.
The latest profitability data, as of February 25, showed falls of up to 50% in the Raiffeisen fund and 45% in the DWS vehicle (see graph). This manager has already announced its intention to stop investing in Russian companies in its actively managed funds. Until further notice, investment funds actively managed by DWS will no longer make new investments in Russian securities.
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