(Bloomberg) — Russia will restart trading in some local equities, ending the nation’s record long shutdown that was meant to shield domestic investors from the impact of tough sanctions over its invasion of Ukraine.
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The Moscow Exchange will resume trading in 33 Russian equities, including some of the biggest companies such as Gazprom PJSC and Sberbank PJSC, on March 24 between 9:50 a.m. and 2 p.m. local time, the Bank of Russia said in a statement. A ban on short selling these shares will apply, it said, adding to an earlier restriction on foreigners exiting local equities. Moscow stock trading has been halted from Feb. 28, marking the longest closure in the country’s modern history.
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Even with the ban on short selling, local traders and strategists are bracing for a selloff, as international sanctions hit everything from Russia’s ability to access foreign reserves to the SWIFT bank-messaging system. The MOEX Russia Index slumped as much as 45%, the most on record, on the day the invasion started. The ruble is among the world’s worst performers this year, although it has edged higher over the past week as peace negotiations continued between Russia and Ukraine.
In a sign of what might happen when local stocks trading reopens, European companies with business exposure to the country have lost more than $100 billion in market value since the war risks surged, Russian companies’ global depositary receipts slumped more than 95% before being halted and global index providers removed the nation’s shares from their indexes.
READ: Why Short Sellers Become Targets During Market Routs: QuickTake
To shield the economy and markets from steep losses, the Bank of Russia earlier banned brokers from selling securities held by foreigners on the Moscow Exchange.
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“The very limited re-opening will make little difference to foreigners who cannot sell and remain trapped, assuming they have not already marked down local holdings to zero,” said Hasnain Malik, a strategist at Tellimer in Dubai.
Foreign holdings of Russian stocks stood at $86 billion at the end of last year, according to data from the Moscow Exchange.
“With foreigners from unfriendly geographies at bay, the pain will be less severe,” said Luis Saenz, head of international distribution at Sinara in London.
The Moscow Exchange will resume trading in 33 stocks that have their primary listing in Russia out of 50 listed in the benchmark index. Yandex NV, TCS Group Holding Plc, Ozon Holdings Plc and other companies, whose main listing is abroad, won’t be restarting their trading tomorrow.
Earlier this month, Russia said it plans to deploy up to $10 billion from its sovereign wealth fund to buy up battered local stocks. This compares with the $650 billion market capitalization of the companies on the MOEX Index before the rout began on Feb. 21.
On Monday, the nation’s local bonds slumped as trading resumed for the first time in three weeks. At the same time, bond holder concerns eased after Russia avoided triggering the first foreign default in more than 100 years after $117 million of interest payments started to reach international investors on Friday.
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