(BFM Bourse) – The Moscow Stock Exchange is currently unable to reflect investors’ concerns about Russian stocks, as the authorities have decided to close it at least until March 5. But the vast majority of the country’s energy flagships are also listed in London, where they are literally collapsing. Faced with mounting sanctions, investors are liquidating their positions. The banking giant Sberbank and the oil and gas groups Lukoil and Rosneft appear reduced to a hundredfold of their value at the start of the year.
The securities of the London-listed Russian giants, which were still trading at tens of dollars only a few weeks ago, are now worth only a few cents. As Russia’s central bank halted stock trading in Moscow on Monday, at least until Friday, shares of London-listed Russian companies are sinking in reaction to sanctions imposed on Russia (and its companies) after the invasion of Ukraine.
For example, the certificate of deposit – a negotiable financial instrument issued to represent the securities of a company listed on another stock exchange – Sberbank collapses by 82% to… 4 cents, when it was trading over $15 on December 31. The decline has thus reached 99.83% since January 1.
Concerned by the sanctions even if it has not (yet) been excluded from the famous Swift network, the first Russian bank announced its withdrawal from the European market on Wednesday. “The group’s subsidiary banks face abnormal outflows of funds and threats to the security of their employees and offices,” the group said in a statement quoted by Russian news agencies. According to it, Sberbank is unable to provide liquidity to its European subsidiaries, due to an order from the Russian central bank. The EU banking regulator (the Single Resolution Board) also announced on Tuesday that bankruptcy proceedings would be opened for Sberbank’s main subsidiary in Europe, Sberbank Europe AG, based in Austria.
If the energy sector is for the time being relatively spared from Western sanctions, because of the dependence of several European countries on Russian gas, producers are also massacred in London. The two gas giants Rosneft and Gazprom have given up 88.2% and 98.8% respectively since January 1, their certificates of deposit being this Wednesday reduced to “penny stocks” – at 0.99 cents for Rosneft and 0 .34 cents for Gazprom around 3:40 p.m. The third heavyweight in the sector, Novatek, in which TotalEnergies is a shareholder, has not escaped the purge (-99.7% since January 1).
European countries can still theoretically buy Russian oil, but market operators have taken matters into their own hands and are trying by all means to obtain supplies in other ways. According to Standard & Poor’s, the discount of crude pumped in the Russian Urals compared to Brent and WTI thus reached nearly 20 dollars on Tuesday in the face of very weak demand.
Several funds, starting with the Norwegian sovereign wealth fund (the largest in the world), have also announced that they will sell all of their Russian assets. Lukoil thus also collapses by more than 99% in London, even if its title is the only one not to switch to the unenviable category of “penny stocks” since it is still trading around 2.7 dollars on Wednesday, against 8 the day before… and nearly 90 at the end of last year.
Quentin Soubranne – ©2022 BFM Bourse