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Russian stock market opens March 24 2022 first time since start of war


The ruble-based MOEX Russia index erased earlier gains and closed 0.3% lower at 2,270 on Monday, trimming gains from the last week amid pressure from energy producers and banks while investors continued to monitor dividend announcements from blue-chip companies.

The financial sector came under the most amount of pressure, led by a near 3% drop for Moscow Exchange shares as investors continued to assess the underwhelming dividend numbers recommended by its board.

Sberbank also closed in the red as investors further digested its results for the end of 2022 to see how the bank has shifted its business following last year’s sanctions.

On the other hand, a handful of lenders closed in the green, underscoring the isolation of Russian financial markets from those in the West as companies were seemingly unaffected by bank failures in the US.

In the meantime, soaring gold prices supported Polymetal and Polus to close 5.9% and 4% higher, respectively.


Russia’s economy holds up, but growing challenges test Putin​

By DAVID McHUGH

Western sanctions have hit Russian banks, wealthy individuals and technology imports. But after a year of far-reaching restrictions aimed at degrading Moscow’s war chest, economic life for ordinary Russians doesn’t look all that different than it did before the invasion of Ukraine.

There’s no mass unemployment, no plunging currency, no lines in front of failing banks. The assortment at the supermarket is little changed, with international brands still available or local substitutes taking their place.

Crowds might have thinned at some Moscow malls, but not drastically. Some foreign companies like McDonald’s and Starbucks have been taken over by local owners who slapped different names on essentially the same menu.

“Economically, nothing has changed,” said Vladimir Zharov, 53, who works in television. “I work as I used to work, I go shopping as I used to. Well, maybe the prices have risen a little bit, but not in such a way that it is very noticeable.”

Russia’s economy has weathered the West’s unprecedented economic sanctions far better than expected. But with restrictions finally tightening on the Kremlin’s chief moneymaker — oil — the months ahead will be an even tougher test of President Vladimir Putin’s fortress economy.

Economists say sanctions on Russian fossil fuels only now taking full effect — such as a price cap on oil — should eat into earnings that fund the military’s attacks on Ukraine. Some analysts predict signs of trouble — strained government finances or a sinking currency — could emerge in the coming months.

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But other economists say the Kremlin has significant reserves of money that haven’t been hit by sanctions, while links to new trade partners in Asia have quickly taken shape. They say Russia isn’t likely to run out of money this year but instead will face a slow slide into years of economic stagnation.

“It will have enough money under any kind of reasonable scenario,” Chris Weafer, CEO and Russian economy analyst at the consulting firm Macro-Advisory, said in a recent online discussion held by bne IntelliNews.

Russia will keep bringing in oil income, even at lower prices, so “there is no pressure on the Kremlin today to end this conflict because of economic pressures,” he said.

As the economy teeters between sanctions and resilience, what everyday Russians can buy has stayed remarkably the same.

Apple has stopped selling products in Russia, but Wildberries, the country’s biggest online retailer, offers the iPhone 14 for about the same price as in Europe. Online retailer Svaznoy lists Apple AirPods Pro.

Furniture and home goods remaining after IKEA exited Russia are being sold off on the Yandex website. Nespresso coffee capsules have run short after Swiss-based Nestle stopped shipping them, but knockoffs are available.

Labels on cans of Budweiser and Leffe beer on sale in Moscow indicate they were brewed by ABInBev’s local partner — even though the company wrote off a stake in its Russian joint venture and put it up for sale. Coke bottled in Poland is still available; local “colas,” too.

ABInBev says it’s no longer getting money from the venture and that Leffe production has been halted. Wildberries and Svyaznoy didn’t answer emails asking about their sourcing.

But it’s clear goods are skirting sanctions through imports from third countries that aren’t penalizing Russia. For example, Armenia’s exports to Russia jumped 49% in the first half of 2022. Chinese smartphones and vehicles are increasingly available.

The auto industry is facing bigger hurdles to adapt. Western automakers, including Renault, Volkswagen and Mercedes-Benz, have halted production, with sales plunging 63% and local entities taking over some factories and bidding for others.

Foreign cars are still available but far fewer of them and for higher prices, said Andrei Olkhovsky, CEO of Avtodom, which has 36 dealerships in Moscow, St. Petersburg and Krasnodar.

“Shipments of the Porsche brand, as for those of other manufacturers, aren’t possible through official channels,” he said. “Whatever is on the market is scattered offerings of cars that were imported by individual persons or through friendly countries by official channels.”

Russia’s economy has weathered the West’s unprecedented economic sanctions far better than expected. But with restrictions finally tightening on the Kremlin’s chief moneymaker — oil — the months ahead will be an even tougher test of President Vladimir Putin’s fortress economy.

Economists say sanctions on Russian fossil fuels only now taking full effect — such as a price cap on oil — should eat into earnings that fund the military’s attacks on Ukraine. Some analysts predict signs of trouble — strained government finances or a sinking currency — could emerge in the coming months.

But other economists say the Kremlin has significant reserves of money that haven’t been hit by sanctions, while links to new trade partners in Asia have quickly taken shape. They say Russia isn’t likely to run out of money this year but instead will face a slow slide into years of economic stagnation.

“It will have enough money under any kind of reasonable scenario,” Chris Weafer, CEO and Russian economy analyst at the consulting firm Macro-Advisory, said in a recent online discussion held by bne IntelliNews.

Russia will keep bringing in oil income, even at lower prices, so “there is no pressure on the Kremlin today to end this conflict because of economic pressures,” he said.

As the economy teeters between sanctions and resilience, what everyday Russians can buy has stayed remarkably the same.
Apple has stopped selling products in Russia, but Wildberries, the country’s biggest online retailer, offers the iPhone 14 for about the same price as in Europe. Online retailer Svaznoy lists Apple AirPods Pro.

Furniture and home goods remaining after IKEA exited Russia are being sold off on the Yandex website. Nespresso coffee capsules have run short after Swiss-based Nestle stopped shipping them, but knockoffs are available.

Labels on cans of Budweiser and Leffe beer on sale in Moscow indicate they were brewed by ABInBev’s local partner — even though the company wrote off a stake in its Russian joint venture and put it up for sale. Coke bottled in Poland is still available; local “colas,” too.

ABInBev says it’s no longer getting money from the venture and that Leffe production has been halted. Wildberries and Svyaznoy didn’t answer emails asking about their sourcing.

But it’s clear goods are skirting sanctions through imports from third countries that aren’t penalizing Russia. For example, Armenia’s exports to Russia jumped 49% in the first half of 2022. Chinese smartphones and vehicles are increasingly available.

The auto industry is facing bigger hurdles to adapt. Western automakers, including Renault, Volkswagen and Mercedes-Benz, have halted production, with sales plunging 63% and local entities taking over some factories and bidding for others.

Foreign cars are still available but far fewer of them and for higher prices, said Andrei Olkhovsky, CEO of Avtodom, which has 36 dealerships in Moscow, St. Petersburg and Krasnodar.

“Shipments of the Porsche brand, as for those of other manufacturers, aren’t possible through official channels,” he said. “Whatever is on the market is scattered offerings of cars that were imported by individual persons or through friendly countries by official channels.”

Unlike European automakers, some corporations are far from bailing.

While 191 foreign companies have left Russia and 1,169 are working to do so, some 1,223 are staying and 496 are taking a wait-and-see approach, according to a database compiled by the Kyiv School of Economics.

Companies are facing public pressure from Kyiv and Washington, but some have found it’s not so easy to line up a Russian buyer or say they’re selling essentials like food.

Moscow residents, meanwhile, have downplayed the impact of sanctions.

“Maybe it hasn’t affected me yet,” 63-year-old retiree Alexander Yeryomenko said. “I think that we will endure everything.”

Dmitry, a 33-year-old who declined to give his last name, said only clothing brands had changed.

“We have had even worse periods of time in history, and we coped,” he said, but added that “we need to develop our own production and not to depend on the import of products.”

One big reason for Russia’s resilience: record fossil fuel earnings of $325 billion last year as prices spiked. The surging costs stemmed from fears that the war would mean a severe loss of energy from the world’s third-largest oil producer.

That revenue, coupled with a collapse in what Russia could import because of sanctions, pushed the country into a record trade surplus — meaning what Russia earned from sales to other countries far outweighed its purchases abroad.

The boon helped bolster the ruble after a temporary post-invasion crash and provided cash for government spending on pensions, salaries and — above all — the military.

The Kremlin already had taken steps to sanctions-proof the economy after facing some penalties for annexing Ukraine’s Crimea peninsula in 2014. Companies began sourcing parts and food at home and the government built up huge piles of cash from selling oil and natural gas. About half of that money has been frozen, however, because it was held overseas.

Those measures helped blunt predictions of a 11% to 15% collapse in economic output. The economy shrank 2.1% last year, Russia’s statistics agency said. The International Monetary Fund predicts 0.3% growth this year — not great, but hardly disastrous.

The big change could come from new energy penalties. The Group of Seven major democracies had avoided wide-ranging sanctions against Russian oil for fear of sending energy prices higher and fueling inflation.

The solution was a $60-per-barrel price cap on Russian oil heading to countries like China, India and Turkey, which took effect in December. Then came a similiar cap and European embargo on Moscow’s diesel fuel and other refined oil products last month.

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Estimates differ on how hard those measures will hit. Experts at the Kyiv School of Economics say Russia’s economy will face a “turning point” this year as oil and gas revenue falls by 50% and the trade surplus plunges to $80 billion from $257 billion last year.

They say it’s already happening: Oil tax revenue fell 48% in January from a year earlier, according to the International Energy Agency.

Other economists are skeptical of a breaking point this year.

Moscow could likely weather even a short-term plunge in oil earnings, said Janis Kluge, a Russian economy expert at the German Institute for International and Security Affairs.

Even cutting Russian oil revenue by a third “would be a severe hit to GDP, but it would not bankrupt the state and it would not lead to a crash,” he said. “I think from now on, we are talking about gradual changes to the economy.”

He said the real impact will be long term. The loss of Western technology such as advanced computer chips means an economy permanently stuck in low gear.

Russia may have successfully restarted factories after the Western exodus, “but the business case for producing something sophisticated in Russia is gone, and it’s not coming back,” Kluge said
 

The ruble-based MOEX Russia index extended early gains and closed 0.9% higher at 2,290 on Tuesday, erasing losses from the prior session and approaching the five-month high touched last week with support from banks and miners, while investors continued to monitor corporate reports and possible dividend announcements.

Gold miners booked sharp gains as bank closures in the US ramped up fears of a full-blown crisis and propped up bullion prices, led by a 1.8% jump for Polymetal ahead of the release of its corporate results on Thursday.

In the meantime, the financial sector rebounded from the slight pullback yesterday, with Sberbank rising 2.5% to its highest since the suspension of the Russian stock market last year.

After sanctions hit Russian banks and excluded lenders from the Western financial community, investors placed large bets on a rebound for the financial sector this year with MOEX’s banking index up 12.3% year-to-date.

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The ruble-based MOEX Russia index extended early losses and closed 1.2% lower at 2,262 on Wednesday, erasing gains from yesterday with pressure from commodity-linked shares.

Prices for energy commodities and base metals booked sharp losses in the session after the Saudi National Bank said it will not provide more support to Credit Suisse in the latter's period of “material weakness”, adding to woes in financial markets worldwide.

Oil giant Rosneft sank 1.8% to lead the decline among energy producers as oil prices fell more than 5%.

Besides reducing profits for oil companies, the tumble in energy prices threatens the Russian economy as a whole, since Moscow largely depends on revenues from energy exports to finance its operations and the budget deficit has widened to a historic high this year.

Miners and metallurgists also booked losses, as the drop in base metal prices offset the upswing for bullion prices.

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The ruble-based MOEX Russia index closed marginally below the flatline at 2,259 on Thursday, as losses for miners and banks offset gains for energy producers while investors digested key corporate results.

Despite a strong session for Sberbank, the Russian financial sector booked losses after Tinkoff Bank reported a 67% slide in 2022 core profits, sending shares of its owner TCS Group to decline 2.2%.

In the meantime, Polymetal stocks sank 3.2% after sweeping sanctions from Western states caused it to post a sharp loss in 2022, forcing the group to not declare any dividends for the year.

On the other hand, Lukoil and Novatek both jumped more than 1% and carried the energy sector to close in the green.

The isolation of Russian financial markets from those of the West since Moscow's invasion of Ukraine prevented any impact on the MOEX from the ECB's rate hike and the systemic banking risks from Europe and the US.

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The MOEX Russia index closed 2.8% up at 2,322 on Friday, the highest since September, carried by Sberbank's dividend announcement while investors digested the Central Bank of Russia’s policy decision.

Shares for Russia’s major state-owned lender rallied 9% after it announced it will distribute a record-setting RUB 565 billion in dividends for 2022, totaling RUB 25 per share, after skipping payouts in 2021.

Trading for Sberbank amounted to 62% of all turnover in the Moscow exchange in the session.

Earlier, the bank stated that strong profit growth during the end of 2022 underscored the success of the bank’s repositioning since being excluded from the Western financial community due to sanctions, sparking a rally for the Russian banking sector.

Meanwhile, the CBR held its key rate unchanged at 7.5% but warned of potential future hikes should inflationary risks increase, as a depleted labor force, deteriorating terms of trade, and the widening budget deficit could lift consumer prices.

MOEX DAILY CHART

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MOEX 12 CHART

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The ruble-based MOEX Russia index soared by 3.2% to close at the six-month high of 2,397 on Monday, extending last session’s near 3% jump as investors continued to bet on strong profits for Russia’s financial sector.

After Sberbank’s 9% rally on Friday due to dividend announcements, VTB shares soared by 14% after the bank’s CEO said the company expects record profits in the first quarter of 2023. Sberbank also rose another 3% on Monday.

Strong corporate results and signals that business is recovering from Western sanctions supported the Russian financial sector to surge over 17% year-to-date.

Meanwhile, Gazprom shares rose by 6.3% on rumors that Chinese President Xi Jinping’s trip to Moscow could include a deal for a third natural gas pipeline to China, known as the Power of Siberia 2.

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The ruble-based MOEX Russia index closed marginally higher at 2,398 on Tuesday, holding the sharp gains from the prior two sessions at levels last seen in September 2022 as advances for energy producers and utility distributors offset losses for miners.

Natural gas producers traded mixed with Novatek shares jumping 2% while Gazprom dropped 1.8% to correct from yesterday’s near 7% surge, as investors continued to monitor talks between Russian and Chinese leaders Putin and Xi Jinping in Moscow for potential developments on another gas pipeline between both countries.

In the meantime, oil producers were also mixed on the Kremlin’s announcement that it will hold March’s current 500,000 bpd output cut until June in response to the EU and G7’s oil embargo.

In the meantime, Sberbank added 0.5% to extend the 15% increase from the last two sessions amid record-setting dividend payments and continued optimism that Russian banks can recover from the impact of Western sanctions this year.

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The ruble-based MOEX Russia index trimmed earlier losses and closed 0.2% down at 2,940 on Wednesday, remaining near the six-month high hit in the last session as losses for energy producers offset gains in other sectors.

Gazprom stocks closed 0.6% lower to extend yesterday’s trim, but shares remain 3% above values from last week as investors continued to assess the company’s future without European exports.

Amid President Xi Jinping’s visit to Moscow, President Putin said that all agreements have been reached regarding the construction of the Power of Siberia 2 gas pipeline, set to increase the supply of natural gas to China.

On the other hand, a 10% surge for the Bank of St. Petersburg carried financial shares to book sharp gains in the session.

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The ruble-based MOEX Russia index closed marginally below the flatline at 2,388 on Tuesday, extending the slight pullback from the previous session with small losses for banks and energy shares offsetting the upward nudge from miners and metallurgists.

Tatneft led the decline in the oil and gas sector and slid 1.6% as investors continued to digest the company’s dividend announcement from earlier this week.

On the other hand, Gazprom edged higher after Deputy Prime Minister Novak said that contract negotiations for the construction of a Power of Siberia 2 pipeline to China are in the final stages.

The pipeline would enable a sharp increase in gas exports to China, vital for Gazprom’s rebound amid current low TTF prices and the destruction of Nord Stream 1.

In the meantime, Mechel tanked nearly 2% and underperformed other steel producers after releasing poor 2022 results.

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The ruble-based MOEX Russia index pared early losses and closed marginally above the flatline at 2,392 on Friday, booking a 3% jump on the week as Moscow sought stronger ties with Asia to rebound from Western sanctions.

The Bank of St. Petersburgh soared 11.5%, joining other banks in declaring a strong payout for last year and signaling optimistic profits for this year as Moscow’s financial sector adapts to business with strict capital controls outside the SWIFT system.

Meanwhile, Gazprom ended the week 4% higher as the Chinese delegation’s visit to Moscow moved forward with contract talks regarding the Power of Siberia 2 pipeline.

The pipeline would enable a sharp increase in gas exports to China, vital for Gazprom’s rebound amid current low TTF prices and the destruction of Nord Stream 1.


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MOEX 12 MONTH CHART

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The ruble-based MOEX Russia index closed 2% higher at 2,440 on Monday, the highest in six months, and extending the 3% gain from the previous week with broad support from main sectors.

Sanctions by Western states isolated Russia’s financial sector enough to make it avoid global banking turmoil, but investors continued to monitor risks on European and US financial institutions for their broad impact on commodity markets.

Energy producers led the gains, supported by some respite for oil prices while traders assessed the outlook of oil and gas exports to Asia.

Gazprom gained 1.75% as the Chinese delegation’s visit to Moscow moved forward with contract talks regarding the Power of Siberia 2 pipeline, vital for Gazprom’s rebound amid current low TTF prices and the destruction of Nord Stream 1.

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The ruble-based MOEX Russia index closed marginally above the flatline at 2,440 on Tuesday, holding the 2% gain from the previous session as investors continued to assess the outlook for the Russian economy as it readapts to activity after the consequences of Western sanctions.

Banks led the gains, supported by optimism in the sector and upcoming dividend payments.

The financial sector in Moscow now advanced more than 20% year-to-date, underscoring the disconnect between Russian financial markets and the external background as sanctions from the West shielded Russian banks from contagion risks due to jitters for lenders worldwide. On the other hand, both miners and energy companies closed in the red.

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The ruble-based MOEX Russia index erased early losses and closed 0.8% higher at 2,460 on Wednesday, the highest in nearly seven months, and extending gains from the prior session as investors continued to show optimism that the Russian economy may resume growth after being hit by Western sanctions last year.

The financial sector jumped by 2% on average to advance 22% year-to-date, supported by a wave of high dividend pledges and signals of robust profits in the last three months.

Also, energy producers closed well above intra-day lows with a 0.4% increase, with Rosneft up 1% and Lukoil adding 0.5%.

Energy profitability has been largely dependent on demand from India and China, while low crude oil prices worldwide reduced the risk of Western insurers triggering their price ceiling.

Among single shares, hypermarket chain Lenta erased a 3% upswing to close 1.2% down after releasing corporate results.

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The ruble-based MOEX Russia index closed 0.2% above the flatline at 2,466 on Thursday, booking its fifth consecutive session in the green as gains for energy producers offset mixed action for banks, miners, and metallurgists.

Tatneft shares added nearly 2% and led the gains for oil companies after the firm upwardly revised estimates of recoverable reserves at the Romashkinskoye field by 1.7 billion barrels.

On the other hand, Severstal and NLMK both slid more than 1%, setting the pace for losses in the steel-making sector.

The latest data showed Russia's GDP shrank by 3.1% in February, slightly less than the 3.2% contraction seen in January.

Also, the annual inflation rate fell to 4.30% in the week ending March 27, down sharply from 5.99% a week earlier and increasing the likelihood that the central bank will continue to hold its key rate at 7.5%.

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https://apnews.com/article/russia-ukraine-business-europe-c809eb2c008ffb34adb2c19c3eca7198

Russian stock market, crushed by war, opens with big limits

The Associated Press

The Russian stock market opened Thursday for limited trading under heavy restrictions for the first time since Moscow invaded Ukraine, coming almost a month after prices plunged and the market was shut down as a way to insulate the economy.

Trading of a limited number of stocks, including energy giants Gazprom and Rosneft, took place under curbs meant to prevent a repeat of the massive selloff on Feb. 24 that came in anticipation of Western economic sanctions.

The significant restrictions on trading Thursday underlined Russia’s economic isolation and the pressure on the financial system despite central bank efforts to curb market plunges. Foreigners could not sell stocks, and traders were barred from short selling — or betting prices will fall — while the government has said it will spend $10 billion on shares in coming months, a move that should support prices.

The benchmark MOEX index gained 4.4% as some companies partially recovered losses from the plunge on the day of the invasion. Airline Aeroflot bucked the positive trend by losing 16.4% — not a surprise after the U.S., European Union and others banned Russian planes from their airspaces.

Russian stocks were only a small part of emerging market share indexes even before the war and only for those with a high risk tolerance, given extensive cronyism, nontransparent accounting and widespread state interference. They lost any attraction for most foreign investors when the Moscow Exchange was dubbed “uninvestable” about a week into the war.

“The stock market is really almost a sideshow at this point,” said Chris Weafer, CEO at Macro-Advisory Ltd., a consulting firm. “It’s more a sentiment indicator because obviously companies are not raising any money on the stock market, and they won’t be able to.”

He said, however, that state-owned banks or funds may have been buying to support prices: “It does look like state-supported buying rather than any genuine interest on the part of investors.”

Government efforts to stabilize stocks and the ruble that has plunged in value are a way to show that some confidence was returning and “to try to get that message across to people not to panic, that this is a temporary situation that will improve,” Weafer said. Nonetheless, he added, the Russian financial system remained in a “fragile” state.

Tim Ash, senior emerging markets sovereign strategist at BlueBay Asset Management, said reopened trading was “deeply managed” and suggested that “for those Russians with some spare cash, there is nothing much else to buy as hedge to inflation and currency collapse.”

Restrictions like shutting down and restricting the stock market are among those that Russia has taken to shore up the financial system against utter collapse, but they also close off the economy to trade and investment that could fuel growth.

Some foreign hedge funds have expressed interest in shopping for distressed assets — viable companies trading at knocked-down prices — but they have no way to take part because of the trading restrictions, Weafer said.

A U.S. official called the severely restricted trading a “charade.”

“This is not a real market and not a sustainable model, which only underscores Russia’s isolation from the global financial system,” Daleep Singh, a deputy national security and economic adviser to President Joe Biden, said in a statement.

The economic turmoil in Russia from sanctions and the war has been severe. Hundreds of U.S., European and Japanese companies have pulled out of Russia. There have been bank runs and panic buying of sugar and other staples. The exchange rate of Russia’s ruble has tumbled.

Outside Russia, the reopening of stock trading on the Moscow Exchange has little impact, including on the vast majority of U.S. investors’ portfolios, said Leanna Devinney with Fidelity Investments.

The exchange’s market capitalization — about $773 billion at the end of last year, according to the World Federation of Exchanges — is a fraction of that of major Western or Asian markets. In comparison, the total of all equities on the New York Stock Exchange is roughly $28 trillion.

Russia’s central bank estimates that retail investors owned roughly 7.7 trillion rubles of stock, equal to $79 billion, as of late 2021.

Stocks last traded in Moscow on Feb. 25, a day after the MOEX sank 33% after Russian forces invaded Ukraine. Russia restarted trading in ruble-denominated government bonds earlier this week.

Roughly a week into the conflict, Russia was removed from emerging markets indexes compiled by MSCI after it determined the market to be “uninvestable.”

The London Stock Exchange suspended trading in shares of 27 companies with links to Russia on March 3, including some of the biggest in energy and finance. The shares lost most of their value before that: Rosneft dropped from $7.91 on Feb. 16 to 60 cents on March 2. Sberbank plunged from $14.90 to 5 cents.

The hungrier the bear gets the more dangerous it becomes, until it is almost starved.


More than a year into Russia's invasion of Ukraine, signs continue to mount that Moscow is struggling under the weight of ballooning military spending. Moscow has consistently put on a brave face when it came to the country's economic health. But it's now classified or unlisted a third of the economic data coming out of the country. According to Russian Finance Ministery data unlisted or classified spending has doubled since last year, indicating around a third of the budget is likely connected to the war effort. 31 Billion dollars in total, dwarfing all other publicly listed government expenses. And Moscow's black budget is ballooning at a time of falling commodity prices, which make up the lion's share of Russia's earnings. Western sanctions also continue to bite according to Russia's president.
At the same time, publicly criticizing Vladimir Putin's war on Ukraine can lead to harsh legal consequences. Most people prefer to voice their discontent in private. But one critical conversation between two prominent Russians has surfaced online.


 

The ruble-based MOEX Russia index erased early gains and closed 0.6% lower at 2,450 on Friday, easing from the sharp upswing over the week with pressure from all major sectors of the Moscow Exchange as investors further assessed Russian efforts to recover from Western sanctions.

Gazprom trimmed gains from the week to close 1.2% lower as investors continued to monitor the outlook and timeline of the Power of Siberia 2 pipeline to China.

The pipeline and other implementations of new supply chains are vital for the company as the halt of exports to Europe and low natural gas prices halted much of the company’s activity.

Outside the main sectors, Aeroflot shares sank 4.2% after the company announced it will not pay dividends for 2022.

Still, the MOEX gained 2.3% on the week and 13.8% on the first quarter of 2022.

MOEX 12 MONTH CHART

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The ruble-based MOEX Russia index closed 0.9% higher at 2,473 on Monday, extending last week’s gain to its highest in seven months with support from heavyweight energy producers.

Shares from major oil companies soared after OPEC+ nations announced a surprising oil output cut.

Russia announced it will cut production by 500,000 barrels per day until the end of the year, doubling the cut announced in February.

Tatneft closed 4% higher, while Rosneft, Lukoil, and Surgut advanced more than 2%.

Besides the clear benefit for oil companies, the rise in crude oil prices supported broader sentiment in the Russian economy as larger energy revenues for the Russian government ease the extraordinary tax programs for other sectors, mandated by the Federal Government amid its unsustainably wide budget deficit.

Banks rose by 1.5% on average, adding over 23% year-to-date, while metallurgists added 0.8% despite the sharp drop in steel prices.

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The ruble-based MOEX Russia index eased from intra-day highs but closed 0.3% higher at 2,480 on Tuesday, the highest in six months, as sharp gains for oil producers outweighed losses for banks and metallurgists.

OPEC+ nations surprisingly announced an oil output cut over the weekend, lifting crude oil prices and energy producers' stocks.

Moscow said it would cut production by 500,000 barrels per day until the end of the year, doubling another cut announced in February.

Among the sector's heavyweights, Transneft and Surgut added 5%.

Higher oil prices also supported broader sentiment as larger energy revenues for the Russian government ease the burden from extraordinary tax programs for other sectors, mandated by Moscow to support its wide budget deficit.

Gazprom, a large bearer of extraordinary taxation, jumped 0.5% in the session.

On the other hand, banks eased from their rally to book slight losses, while lower steel prices in China pressured metallurgists.

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The ruble-based MOEX Russia index extended early gains and closed 0.8% higher at 2,500 on Wednesday, the highest in one year, with continued support from energy shares amid improved signs for the outlook of the Russian economy.

The Ministry of Finance said it will sell RUB 74.6 billion worth of foreign currency in April to offset the reduced inflow of foreign exchange from energy revenues to the country.

While the selling means that oil and gas revenues continued to miss the budget's target, the pace of the deficit narrowed from February and March, raising hopes that the federal government can solidify its fiscal position and reduce extraordinary taxation measures for MOEX blue-chips.

Transneft rallied 3% while Lukoil and Surgut both added 1%, extending the sector’s rally since OPEC+ announced its production cut.

On the other hand, VTB sank more than 6% after releasing 2022 results and underwhelming dividend amounts.

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The ruble-based MOEX Russia index traded higher on Friday, as energy producers continue to extend the sector’s rally since OPEC+ announced its production cut. Surgut added 1%, followed by Tatneft and Lukoil.

Russia said it will sell RUB 74.6 billion worth of foreign currency in April to offset the reduced capital inflow from energy revenues to the country.

While the selling means that energy revenues continued to miss targets, the pace of the deficit narrowed from February and March and raised hopes that the government can solidify its fiscal position.

The index is up more than 2% this week, the seventh straight week of gains.

MOEX MONTH CHART
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