The Moscow Exchange has enjoyed modest gains as it reopens for trading activity. The ruble-based MOEX benchmark index ended the shortened session up 4.4% on Thursday.
Having witnessed a 33% slump on the first day of the Ukrainian invasion, the Russian Government took measures to prevent that from happening again as it reopened the Exchange.
Most trading transactions on the Moscow Exchange were suspended on February 28, four days after Russia commenced what President Putin termed “Special Military Operation” in Ukraine. The benchmark had fallen 30% in February before the suspension of trading, as Western sanctions targeting Russia’s financial system threw stock markets into turmoil.
Measures taken by the Government as announced by the Central Bank earlier includes preventing foreigners from exiting local equities and banning short selling.
The Moscow Exchange said the share of individual investors in today’s trading volume was 58%, with 567,000 retail traders taking part along with 121 professional participants, according to a statement on its website.
The total trading volume over four hours today was 108.6 billion rubles ($1.1 billion), the bourse said. This compares with 190 billion rubles of average daily volume in January-February, according to the exchange.
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The Moscow Exchange resumed trading in 33 out of 50 equities listed on the benchmark on Thursday. Among the biggest advancers were gas giant Gazprom PJSC and oil company Lukoil PJSC, while Aeroflot PJSC slumped along with Mobile TeleSystems PJSC and Inter RAO UES. Other oil majors also outperformed as crude oil has surged over 20% in the past month while Russian stocks were closed.
The sanctioned lender VTB Bank PJSC retreated as much as 21% before paring declines to 5.5%. Sberbank PJSC trimmed earlier gains to trade 4.2% higher after its Chief Executive Officer Herman Gref was sanctioned by the U.K. today.
Only equities that have primary listings in Russia were active today, meaning Yandex NV, TCS Group Holding Plc, Ozon Holdings Plc and other companies with main listings abroad haven’t resumed trading.
Russian stocks have been excluded from global benchmarks and exchange-traded funds tracking the country’s shares have been frozen, while European companies with business exposure to the country have lost more than $100 billion in market value since the war risks surged, and Russian companies’ global depositary receipts slumped more than 95% before being halted.
Limited Russian stocks trading will continue with another shortened session between 9:50 a.m. and 2 p.m. Moscow time on Friday, the central bank said in a statement on its website. Short selling in 33 companies on the MOEX Russia Index will continue to be banned, and the trading will also be expanded to non-benchmark equities but in a special negotiated market mode.
Russia is saying tat its wealth fund might step in and support the equity market with up to $10 billion dollars.
Most analysts are skeptical about the recovery recorded in today’s trading, according to Yahoo Finance report.
“I wouldn’t read too much from today’s price action as it’s still not a properly functioning market,” said Matys, a foreign-exchange analyst. “Given that various measures are still in place essentially preventing market players from reducing their holdings of Russian stocks, today’s price action doesn’t fully reflect sentiment amongst investors,” said Piotr Matys of InTouch Capital Markets Ltd.
Data shows that sovereign wealth fund or big pension funds didn’t participate in the days trading, according to local market participant Elbek Dalimov, head of equities trading at Moscow-based Aton. He stated that Foreigners, who were restricted from selling, hold more than half of the Russian stock market’s free float.
Iskander Lutsko, chief investment strategist at ITI Capital in Moscow, said local investors could flock to Russian equities as a hedge against inflation, which has surged near levels unseen since the government’s debt default in 1998.
“People have been taking the money out of deposits, because they understand the considerable risks from the pick-up in inflation,” he said. “So it makes more sense to find alternative investments, anything that isn’t within the current capital restrictions, and equity markets present a great opportunity in that sense.”
Dmitry Polevoy, an analyst at Locko-Invest in Moscow, agrees that local investors could provide a boost to the market.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
