by Alexander Marrow, Olga Popova and Katya Golubkova
MOSCOW (Reuters) – Tensions between Russia and the West have already melted the capitalization of the Moscow Stock Exchange by 5.5 trillion rubles (62 billion euros), sending the ruble to its lowest level in 14 months and caused a surge in government bond yields despite strong economic fundamentals.
The ruble-denominated MOEX index has lost about 26% since its peak in October, according to data provider MOEX Data.
However, it regained ground on Wednesday in the wake of the major European indices, as did the RTS index, denominated in dollars. The ruble remained under pressure on the foreign exchange market.
This situation risks in particular leading to the freezing of all IPO projects launched in Russia, while a dozen companies in raw materials, distribution or even financial services hoped to raise some two billion euros in the coming months.
The Russian IPO market picked up again last year, benefiting among other things from the positive impact of the rise in oil prices on the country’s economy: the capital raised in 2021 reached its highest level in ten years at nearly €3.3 billion according to Refinitiv data.
But “the market will need six to nine months, or even more, to recover,” said Vladimir Tsuprov, chief investment officer of TKB Investment Partners, which manages more than six billion euros in assets.
Among the companies planning an IPO in 2022 is food retailer VkusVill according to multiple sources. He said Wednesday that an IPO remained one of the options considered but that it was too early to discuss concrete projects.
For some, however, the current situation constitutes an investment opportunity.
“Very high commodity prices and the imminent end of the central bank’s rate hike cycle are favorable for Russian assets,” said Sergueï Dioudine, investment director of VTB Capital Investment Management.
In its forecasts published on Tuesday, the International Monetary Fund (IMF) said it expects the Russian economy to grow by 2.8% this year after 4.5% in 2021.
(French version Marc Angrand)
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