In New York, the 1914 restrictions were designed “to stop Europeans from selling their shares and cashing out their dollars for gold, and it worked,” Mr. Russia has prevented foreign investors from selling rubles for dollars. William Silber, a finance professor at New York University’s Stern School of Business, studied that episode and said market shutdowns tended to accomplish their goals. history was a four-month closure of the New York Stock Exchange during World War I. Both markets fell sharply when they initially reopened, but regained their footing and have been trading ever since. In recent history, Greece closed its market for five weeks in 2015 during its debt crisis, and Egypt halted trading for about eight weeks in 2011 amid the Arab Spring uprising. Other countries have closed their stock markets for longer periods than Russia just did. (The firm holds hundreds of millions of dollars in Russian stocks across its funds.) He isn’t interested in selling, and he doesn’t know how he would complete the transactions anyway, since as a foreign-owned fund his holdings are frozen. Grapengiesser of East Capital said he had been getting “three calls a day” from foreign hedge funds looking to buy his Russian shares at steep discounts. The fact that companies are worth something at home but considered worthless abroad neatly captures how comprehensively the Russian market has been severed from the rest of the world.įor some, that’s an opportunity. Russian companies with listings on foreign markets, which continued to trade after the Moscow market was closed, have seen their values plunge to nearly zero. S&P Global Market Intelligence recently estimated that the average public company in Russia has a 1-in-5 chance of defaulting on its debt. Russia’s public companies, which tend to be the biggest and most international in scope, are increasingly cut off from foreign markets, especially if their owners are under Western sanctions. The country won’t fully return to its prewar size until the 2030s, according to their forecast.
Investors who screen their investments according to environmental, social and governance, or E.S.G., principles are also reconsidering their exposure to all things Russian.Īnalysts at IHS Markit expect the Russian economy to shrink 11 percent this year and inflation to more than triple, to over 20 percent. Sanctions are hitting the Russian economy hard, and the measures that Moscow is taking in response, including restricting access to foreign currency and raising interest rates, further limit what companies can do. Grapengiesser said.īut investing in Russian stocks is a much different proposition now. “That’s not something that would have happened even a few years ago,” Mr. Before the war, he said, his wife’s younger co-workers asked her for stock picks after they found out what he did for a living. Jacob Grapengiesser, a partner at the Swedish investment firm East Capital, was based in Russia until recently. That said, the ranks of retail investors in Russia, though relatively small, have been growing. But the market, such as it is, is down 20 percent from the day before the war, and more than 30 percent lower since the start of the year. The benchmark index rose by a bit less than 1 percent in the two days after the reopening. In part because of the restrictions, the market didn’t crash, as many had predicted. Trading was open for about four hours each day.Ī White House adviser called it “a Potemkin market opening.” The government had pledged to spend up to $10 billion buying shares. Foreign investors couldn’t sell their holdings, and there was a blanket ban on short-selling, which stopped traders from betting on falling prices. When the market reopened, only 33 stocks (out of several hundred) were allowed to trade, under heavy restrictions. Its fragile state is a reflection of Russia’s generally precarious financial situation, with its economy increasingly isolated and its institutions unable to function as they did before.
Russia’s stock market is hardly in good health. But on Thursday, almost a month after the market closed, trading partly resumed.
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