The London Stock Exchange (LSE) on Mar. 4, suspended trading on a second round of Russian stocks, because of continuing market deterioration and as some insurers withdrew coverage from exporters due to increasing sanctions over the Russian invasion of Ukraine.
The LSE had earlier suspended trading on Mar. 3 for 27 Russian companies, to prevent investors both buying and selling Russian securities in and out of the country.
Western banks, investors, and insurers have in recent days have been pulling their investments from Russia and halting the provision of services, as more sanctions were placed on Moscow.
The governments of the UK, the European Union, and the United States are continuing to roll out more financial sanctions on Russia to prevent its companies from accessing Western markets.
Global depositary receipts (GDRs) which represent shares in a foreign company, were no longer accepted for eight Russian stocks including Sistema, Etalon Group, and Magnit, preventing them from trading on the LSE.
The trading authorities said that it was acting to “maintain orderly markets,” amid mass selling of Russian stocks and “ongoing deterioration of market conditions,” as foreign investors cut ties with the country.
High-profile Russian banks, such as Sberbank, and major companies like Evraz, Gazprom, En+, and Rosneft were also penalized by the trading suspensions in London.
There are currently no Russian securities trading on the LSE following the move.
“This captures all Russian GDRs on our markets,” said a London Exchange spokesperson.
The LSE followed the lead of the Deutsche Boerse AG in Germany, which shut its doors earlier in the week to Russian securities listed on its market due to the sanctions.
The ability of investors to trade Russian stocks is further limited by a decision from the Russian Central Bank to keep the country’s stock market largely closed for the fifth day in a row.
Trade credit insurers, who provide a financial safety net for exports and imports, are pulling back from covering businesses that export to Ukraine and Russia given the risks of sanctions, high claims, or missed payments.
The move in the nearly $3 trillion global market is expected to add pressure on Russia’s weakened economy.
The UK-based Institute of Directors and the European Confederation of Directors’ Associations urged their nationals to quit Russian boards, saying it was “no longer tenable” for them to remain and adding that any directors of Belarusian firms should also quit.
European Union officials are also examining whether to curb Russian influence and access to finance at the International Monetary Fund following the Ukraine invasion.
The United States is expected to continue with similar multilateral sanctions to target the wealth of Russian oligarchs as part of its campaign to pressure the Kremlin.
Some investors are buying into devalued funds linked to Russia, seeing current distressed levels as a potentially cheap way to acquire Russian assets if the crisis subsides.
However, the majority of big investors are rushing to divest themselves of their now worthless Russian assets as fast as possible, as future business with Moscow appears dormant for now.
