Russia reopens stock market, soars 14%

During the month-long market shutdown, some investors have been waiting to buy before trading reopens.

On Thursday (March 24), the Russian stock market, which has been closed since the end of February, partially resumed trading. The MOEX index once rose by more than 14% after the opening of the market. Oil giants Rosneft and Lukoil, Rusal and nickel company Norilsk Nickel all saw double-digit gains. As of press time, the increase in the MOEX index has narrowed to around 5%. The trading time of
Russian stock market is currently shortened to 4 hours, and 33 stocks in the benchmark MOEX index composed of 50 stocks are tradable, including natural gas giant Gazprom and Sberbank (Sberbank). largest company in the country. Foreign investors who hold 80% of the outstanding shares of the Russian stock market are prohibited from selling. This ban will last until April 1, and all investors cannot short stocks.
More than a dozen Russian stocks whose primary listing place is overseas cannot participate in trading, most of which are Russian technology companies, including Internet platform Yandex (YNDX), TCS Group Holding (TCS.UK), the parent company of online bank Tinkoff Bank, and E-commerce Ozon (OZON), etc.
The Moscow Exchange has been closed since the market closed on February 25. Before the resumption of trading this time, the market value of the MOEX index evaporated by about 35%, and the RTS index denominated in US dollars plummeted by 41%.
"Barron's Weekly" believes that the rapid rise of Russian stocks in early trading on Thursday shows that during the month-long closed market period, some investors have been waiting for trading to resume before buying.

1, the recovery of the ruble has brought a boost to the stock market

BoCom International’s managing directorHong Haopointed out today that the jump in the Russian stock market mainly reflects the rubleexchange rateunder the influence ofPutinordering Europe to buy Russian natural gas in rubles, The formed overnight island reverses .
Faced with domestic economic and market turmoil, Russia is continuing to take some measures to reduce the impact of sanctions.
Putin announced on March 23 that when Russia supplies natural gas to EU member states and other "unfriendly" countries and regions, it will use ruble settlement instead. . Jonathan Stern, founder of the gas research program at the Oxford Institute for Energy Studies, said: "Contracts stipulate the currency of payment, mainly euros, and that is the point where there is no agreement between the parties involved. It cannot be changed.”
Although some European countries have already expressed their unwillingness to use rubles for settlement, Putin’s decision still pushed the ruble exchange rate soaring by 6%.
Although the ruble exchange rate has fallen again, good news is still coming out. Indian media reported on March 24 that the Indian government approved a Russian proposal to allow Russian entities to invest in bonds of Indian companies. This will activate the rupee and ruble exchange mechanism, and India will continue to do business with Russia, buying Russian energy and other goods.
The exchange-traded fund VanEck Russia (RSX), which tracks large-cap Russian stocks , has been suspended since March 4, when the fund fell 79% and has not yet resumed trading.
"Barron's Weekly" pointed out that one of the reasons why VanEck Russia has fallen more than the RTS index is that the ruble has fallen by 33% this year as of early March, and the ruble's decline this year has narrowed to 26%. The ruble got a boost.

2, in active rescue of the market, the Russian economy is facing a "major test"

According to media reports, the reopening of the market will be a major test of the Russian economy. Structural transition", analysts predict, since the collapse of the Soviet UnionThe worst economic crisis Russia is facing .
"Barron's Weekly" reported that Russia is formulating a long-term strategy to stabilize the domestic market, and the government may form a "national team" to buy stocks, but this plan has not yet been perfected. The plans announced so far include the Kremlin announced on March 1 that the National Welfare Fund will invest up to 1 trillion rubles (about 10.3 billion U.S. dollars) in the stock and bond markets to stabilize the financial market. analyst of Aton, a brokerage firm, said in a research report released recently that these measures of the Russian government should prevent deep adjustments after the transaction resumes.
Russia is also working on a plan to split the stock market in two, one for local investors and the other for foreign investors, which could take shape as early as next month. Foreign investors can sell their holdings in stocks or bonds, though they will still face restrictions imposed by Russia's capital controls since February, preventing them from moving proceeds out of Russia. Jacob Grapengiesser, head of eastern Europe at
emerging market fund manager East Capital, said: "The biggest concern right now is that the Russian central bank is being sanctioned and they don't want foreign investors to sell their shares and hold Rubles are exchanged for hard currency."

3, short-term volatility is limited, and has little impact on the external market

"Barron's Weekly" believes that given the possibility of the stock market being split in two, and a large group of market participants being shut out , so it is difficult to judge the direction of the Russian stock market when trading resumes. "As Russia has been dropped from some of the major benchmarks, investors tracking one of them could be under pressure to sell, exacerbating volatility," said Malcolm Dorson, fund manager at
Mirae Asset Global Investments. However, the ban on selling can limit short-term fluctuations."
In addition, "Barron's Weekly" pointed out that the Russian stock market's fuse mechanism is already in place, if the MOEX index fluctuates by more than 15% within 10 minutes, Trading will be suspended and a 20% volatility threshold will be set for individual stocks . According to
media, the reopening of the Moscow Exchange has little impact on investors outside Russia, and its market capitalization is only a fraction of that of major Western or Asian markets.
Hualong Securities pointed out that in the overall allocation of foreign capital to emerging markets, Russia’s allocation accounts for about 1.5%-2%, and passive funds in emerging markets are about 600 billion U.S. dollars. Based on this ratio, there are only more than 10 billion U.S. dollars in positions. After Russia is removed from the emerging market index, funds' risk appetite for markets such as China will not be greatly affected.
article | "Barron's Weekly" Chinese version of the writer Guo Liqun editor of
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(This article is for informational purposes only and does not constitute or be relied upon as investment, accounting, legal or tax advice.)