Russia keeps stock trading closed in nation's longest shutdown

[DUBAI] The Russian stock market will be closed to trading for a fifth straight day, marking a record in the country's modern history, in a continuing bid to stave off the impact of global sanctions for domestic investors.

Since the Moscow Exchange's equity trading was last open a week ago, Russian stocks listed in London lost more than 90 per cent of their value before getting suspended, global index providers announced plans to remove the nation's shares from their indexes and European companies with business exposure to the country lost more than US$100 billion in market value.

As a result of international sanctions over Russia's invasion of Ukraine- which hit everything from its ability to access foreign reserves to the Swift bank-messaging system - uncertainty has gripped Russia's markets across asset classes, with many investors deeming the nation "uninvestable".

Russia has promised to step in and prop up the equity market with up to US$10 billion when it reopens. The plunge in foreign-listed shares of Russian companies is an indicator of how local equity investors might react when Moscow trading resumes.

The London Stock Exchange on Thursday (Mar 3) suspended trading in dozens of Russian depositary receipts, citing the war in Ukraine and market conditions. MSCI and FTSE Russell on Wednesday said they would cut Russian equities from widely-tracked indexes.

Meanwhile, several exchange-traded funds (ETFs) were also suspended in the wake of the events. The creation of shares for the VanEck Russia ETF, the biggest ETF investing in Russia, has been halted until further notice, effectively stopping inflows into the fund. BlackRock did the same with its iShares MSCI Russia ETF, among several other firms.

Not unprecedented

While 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 bourses were shut in 2001 after the 9/11 attack. Trading in US shares resumed after being closed for 4 trading days, with the S&P 500 slumping about 5 per cent.

Egypt's stock exchange was closed for nearly 2 months in early 2011 amid protests that toppled President Hosni Mubarak's 30-year regime. The shutdown followed a drop of 16 per cent in the nation's equities in just 2 days. And when the index reopened, the selloff resumed and the index ended up 49 per cent down for that year. BLOOMBERG