Shares rose in Russia as the Moscow stock exchange partially reopened after a trading halt of more than three weeks after sanctions sent stocks into the free.
The benchmark Moex index was up about 9% in morning trading with shares changing hands in Moscow for the first time since Feb. 25.
Trading continued in 33 of the 50 stocks that make up Russia’s equity benchmark, including Gazprom, Sberbank, Rosneft and VTB Bank, in a shortened trading session from 9:50 a.m. to 2 p.m. Moscow time.
The resumption of trading comes a few days after Russia’s central bank first steps to settle billions of dollars worth of stock deals by international investors that got stuck when Vladimir Putin introduced capital controls at the end of February.
Many restrictions still apply even after the exchange reopens. Short selling is prohibited and while domestic investors are allowed to trade relatively freely, foreign investors cannot exit the market.
And while transactions can be settled in either US dollars or rubles, foreign investors are still prohibited from selling shares until April 1. All funds must also remain in Russia even after investors withdraw money.
The White House has called the partial reopening of Moscow’s stock exchange a “charade” ahead of President Joe Biden’s appearance at meetings with NATO, G7 and EU leaders in Washington. Brussels, vows that the US will seek to further isolate Russia from the global economy. as Putin continued his war against Ukraine.
“Russia has made it clear that it will pour government resources into artificially collecting shares of trading companies. This is not a real market and not a sustainable model,” Daleep Singh, deputy US national security adviser, said in a statement Thursday morning. “What we’re seeing is a charade, a Potemkin market reopening.”
Thursday’s Moex gains still send the stock benchmark down nearly 30% this year, while the Russian ruble has fallen about a fifth against the dollar in the same period.
The country’s central bank has taken extensive measures to combat financial instability caused by Western sanctions imposed on Russia, including raising its benchmark interest rate to 20 percent at the end of February.
Last week, the central bank kept interest rates at that level as it sought to gauge the impact of significant tightening on the Russian economy.
“The key argument in keeping rates unchanged is that the much higher policy rate has helped stabilize the financial system by facilitating withdrawals from banks,” said Ivan Tchakarov, an analyst at Citigroup. goods becomes less favorable”. “Next quest [central bank] are facing is managing inflation expectations and anticipation of price increases. “
On Wednesday, analysts at S&P Global Market Intelligence warned that Russia faces “the deepest recession since the 1990s”, predicting that gross domestic product will shrink 22% by 2022.
They added that real GDP is “not expected to regain its 2021 peak until the 2030s”.
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