Russian stocks met with volatility as trading resumed in Gazprom, Sberbank and 31 other equities on Thursday, after a month-long closure related to the Ukraine war.
MOEX Russia Index moved sharply
The MOEX Russia Index was up 10% initially but closed with a 4.37% gain on Thursday. Short-selling remained restricted and foreign investors were disabled from offloading OFZ Ruble bonds or Russian equities until April 1st.
Among notable gainers were Rosneft, Lukoil, Rusal, and Norilsk Nickel, up 16.97%, 12.41%, 15.81% and 10.17%, respectively. On the flip side, Aeroflot closed roughly 16.50% down. According to True Insights’ Jeroen Blokland:
Investors are turning back to Russian stocks perhaps based on the idea that valuations will revert to pre-war levels. But this is unlikely to happen. It’s very difficult to assign fundamentals, but what we do know is that self-sanctions will remain for a very long time.
Russian economy to contract by 15%
The Institute of International Finance also agrees that the self-withdrawal of foreign companies from Russia in response to its military operation in Ukraine will result in a 15% hit to the Russian economy this year.
Together with a decline of 3.0% in 2023, this will wipe out fifteen years of economic growth. However, the impact on medium and long-term prospects is likely to be even more severe.
The United States is expected to announce new sanctions against Russia today, which will likely hit more than 300 of its elites.
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