Russia reopens stock market

The Central Bank of Russia said there will be some restrictions in the process of reopening the floor stockin which stocks of large companies such as Sberbank or Gazprom will limit the trading time, and short-selling activities will also be suspended.

Moscow Stock Exchange. (Photo: Bloomberg)

Foreign investors will also not be allowed to trade again, because Russia currently prohibits foreigners from selling shares of Russian companies until the end of April 1.

According to a policy introduced by Russia’s Central Bank on February 28, Russian stockbrokers cannot let foreign customers sell shares. The regulation will prevent foreigners from selling off Russian stocks when the market reopens. It is known that foreign investors play a large role in the Russian stock market.

As of February 2020, foreign institutional investors hold about 75% of the volume of shares floating on the Russian market, according to Sberbank Investment Research.

This raises concerns that the market will be distorted in the absence of foreign investors – who account for nearly 50% of share trading volume on the Moscow exchange in the first half of 2021.

Under the plan being discussed, Russian officials intend to separate the stock market into two markets, one for foreign investors and one for domestic investors, according to the source. close. As a result, foreign investors can sell stocks or bonds, but will be restricted from moving money out of Russia because of capital controls.

The Russian stock market has been closed since February 25, after continuously plunging due to Western sanctions.

Since the last trading session on February 25, Russia is the country that is subject to the most sanctions in the world. A devaluation of the local currency, rampant inflation or a drop in output make it difficult for the government’s market stabilization measures to control selling pressure.

On March 23, the ruble’s exchange rate recovered to 95 RUB to 1 USD after President Vladimir Putin demanded that unfriendly countries pay for gas in Ruble.

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