The Central Bank of Russia is evidently looking to postpone the inevitable. The bank yesterday announced that the Moscow Exchange would again be closed for trading this week, marking the third straight week in which investors have been unable to trade securities.
The market itself has been closed since February 25, the day following which the country began its “Special Military Operation” to invade Ukraine. Trading was halted after the exchange saw its main index crater by 33% following the invasion, with the Central Bank evidently looking to delay the inevitable crash that is expected to follow the reopening of the exchange.
In the time since the exchange has closed, the country, and more specifically, the Central Bank, has seen a number of sanctions imposed against it that are expected to only further market declines. Days after shutting down the exchange, the Central Bank suspended currency intervention due to the crippling sanctions, while mid last week the country halted exports of several raw materials, which will only harm large entities on the exchange and push further drawdowns.
It’s currently unclear when, specifically, the exchange is expected to reopen. For the time being, the Central Bank has halted trading until at least March 18, although at this point the extension of the suspension is expected to occur until progress is made in terms of a solution to the conflict in Ukraine.
And even when markets do reopen, investors may wish they hadn’t. Current estimates from analysts, as per Bloomberg, indicate that a further decline anywhere from 20% to 50% could occur when markets resume trading – and that might be optimistic. Russia-based firms trading on the London exchange have seen drawdowns of beyond 90% in some cases.
The Ruble meanwhile continues to be beat down, with one US Dollar currently equating to 134.2 Rubles on foreign exchange markets.
Information for this briefing was found via The Central Bank of Russia and Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
