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Russian stock market resumes trading after being crushed by war

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The Russian stock market has resumed limited trading under heavy restrictions almost a month after prices plunged and the market was shut down following the Kremlin’s invasion of Ukraine.

Trading of a limited number of stocks, including in energy giants Gazprom and Rosneft, took place under curbs meant to prevent a repeat of the massive sell-off that took place on February 24 in anticipation of western economic sanctions.

Foreigners cannot sell and traders are barred from short selling or betting prices will fall.

The benchmark Moex index gained 8% in the first minutes of trading.

The reopening of stock trading on the Moscow Exchange has little impact on investors outside Russia.

Its market capitalisation is a fraction of that of major western or Asian markets.

Foreign investment managers lost one reason to buy Russian stocks after MSCI declared the market to be “uninvestable” following the invasion and removed it from global indexes.

Hundreds of US, European and Japanese companies have pulled out of Russia.

There have been bank runs and panic buying of sugar and other staples. The exchange rate of Russia’s rouble has tumbled.

Foreigners are barred from selling shares under rules imposed to counter western sanctions against Russia’s weakening financial system and currency.

Trading will be allowed in 33 of the 50 companies that are part of Moex, also including air carrier Aeroflot, according to a central bank announcement.

Stocks last traded in Moscow on February 25. A day earlier, the Moex sank 33% as Russian President Vladimir Putin’s forces streamed across their neighbour’s border.

Moscow’s stock exchange had a market capitalisation of about £586 billion at the end of last year, according to the World Federation of Exchanges.

That is dwarfed by the New York Stock Exchange, where the total of all equities is roughly £21 trillion.

Russia’s central bank relaunched trading in rouble-denominated government bonds this week.

The central bank estimates that roughly 7.7 trillion rubles, equal to £60 billion, of Russia’s stock was owned by retail investors as of late 2021.

Russia’s government may intervene to support its companies and investors.

Prime minister Mikhail Mishustin said on March 1 the country’s National Wealth Fund would purchase up to a trillion rubles (£7.7 billion) in Russian shares by the end of the year.

Before the war, foreign investors were showing growing interest in Russian stocks as an emerging markets opportunity but, roughly a week into the war, Russia was removed from emerging markets indexes compiled by MSCI, a division of Morgan Stanley.

That took away a primary incentive for fund managers to invest there.

On March 3, the London Stock Exchange suspended trading in shares of 27 companies with links to Russia, including some of the biggest in energy and finance.

The shares lost most of their value prior to the suspension.

Rosneft shares dropped from £6 on February 16 to 46p on March 2.

Sberbank plunged from £11.30 to 4p.

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