https://ift.tt/gNjKAdm Aims To Stop Investor Stampede As En masse Sanctions Cripple The Economy – Cryptovibes.com – Daily Cryptocurrency and FX News

Summary

• Man and abrdn cut Russia positions
• Liontrust suspends dealing in Russian fund
• Austria’s RBI looks at leaving Russia – sources
• Visa, MasterCard block many in Russia
• German watchdog keeps a close eye on VTB’s Europe arm

As Russia tried to stem an investor retreat driven by crippling Western sanctions imposed over the invasion of Ukraine, the government said on March 1 that it was placing temporary restrictions on foreigners seeking to exit Russian assets.

With Russia’s biggest lender, Sberbank falling to 21 cents on the dollar from just under $9 before the invasion and London-listed ishares MSCI Russia ETF (CSRU.L) plunging 33% to hit a fresh record low, Russian assets went into a free-fall on Tuesday.

The ruble slumped to a record low and trading froze on its bonds, as major money managers, including British asset manager abrdn (ABDN.L) and hedge fund Man Group (EMG.L), kept slashing their positions in Russia.

While aiming “to help ensure our clients can exit their positions in Russian securities” where allowed, top asset manager BlackRock Inc (BLK.N) was consulting with index providers, regulators, and other market participants.

A senior portfolio manager at Bluebay Asset Management in London, Kaspar Hense said:

“There is certainly a willingness from asset managers and benchmark providers to get rid of Russia exposure in their portfolios and indexes. The big question is where do buyers turn up?”

Two people with knowledge of the matter told Reuters, Austria’s Raiffeisen Bank International (RBI) (RBIV.VI) is also looking into leaving Russia, a move that would make it the first European bank to do so since the invasion of Ukraine – which Moscow calls a “special operation.” RBI has no plans to leave Russia, for now.

To ensure foreign investors take a considered decision, they will temporarily be stopped from selling Russian assets by the country, the Russian Prime Minister, Mikhail Mishustin announced but did not give details.

Billions of dollars’ worth of securities held by foreigners in Russia are at risk of being trapped as Moscow moves to impose capital controls.

A  London-based hedge fund manager invested in European financial firms who refused to be named, said, “It has been a hell of a rollercoaster,” adding that the fund had cut some indirect exposure to Russia.

While the prices of some of the most popular Russia-focused exchange-traded funds were trading at a discount to their net asset values, British asset manager Liontrust has suspended dealing in its Russia fund.

Eleven Russia-focused funds which have been suspended have been identified by rating agency Fitch, a spokesperson said by email. In that context, with total assets under management (AUM) of 4.4 billion euros ($4.9 billion) at end-January.

In recent days, U.S.-listed exchange-traded funds tracking Russian stocks have come under intense selling pressure, with the VanEck Russia ETF (RSX.Z) falling 24% on March 1, 2022.

The issuer of one fund, Direxion’s Russia 2x ETF (RUSL.P), said it would cease trading on March 11 due to heightened volatility and restrictions on Russian securities hence it drew a rush of options trading.

The World Will Not Invest

Russia, in a matter of weeks, has turned from a lucrative bet on surging oil prices to an un-investable market with a central bank hamstrung by sanctions capital controls choking off money flows, and major banks shut out of global payments system SWIFT.

As sanctions are rolled out, SWIFT was waiting to see which banks authorities want to be disconnected from its financial messaging system.

Multiple Russian financial institutions have been blocked by Visa Inc (V.N) and MasterCard Inc from their networks and the European arm of Russia’s VTB Bank (VTBR.MM), which was no longer accepting new clients, was being closely monitored by Germany’s market regulator BaFin.

After heavy declines on February 28 due to lenders’ exposure to Russia, shares in some European banks remained under pressure and on Tuesday the European banking sector (.SX7P) was down 3%.

Around two billion pounds of asset manager abrdn’s client money is invested in Russia and Belarus, Chief Executive Stephen Bird said, adding that it has been cutting its positions. He added:

“We will not invest in Russia and Belarus for the foreseeable future.”

Antoine Forterre, Man Group’s Chief Financial Officer, told Reuters on Tuesday that it cut its investments in Russia in recent weeks and presently has negligible exposure to Russia and Ukraine across its portfolio.

After sliding on Monday, Raiffeisen’s (RBIV.VI) shares dropped 11.3% in the early afternoon. While Italy’s UniCredit (CRDI.MI) shares fell 2.5%, after Monday’s 9.5% fall.

Two sources told reporters that banks with close ties to Russia, such as the European arm of VTB and Raiffeisen, have been put under close observation by the European Central Bank.

NO QUICK RESOLUTION

While Russia faced increasing isolation over its actions in Ukraine, investor comments and Tuesday’s share price swings happened at the same time, with President Vladimir Putin being denied decisive early gains due to resistance on the ground.

A raft of new sanctions has been announced by Britain, Canada, Europe, the United States, and other countries in recent days. After Britain’s financial regulator suspended two global depository receipts (GDRs) for VTB Bank in response to sanctions, the London Stock Exchange said on Tuesday that it would stop trading in them.

Securities issued by Russia that the German stock exchange operator would no longer trade to bonds were increased.

According to a letter seen by Reuters and people familiar with the matter, no transactions involving Russian entities subject to international sanctions will be processed by India’s top lender.