Scared Putin refuses to open Russian stock market – ‘massive destruction’ of wealth

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Stock trading on the Moscow Exchange has been shut since February 25, the day after Russian forces invaded Ukraine. The country’s central bank said on Saturday that it had decided not to reopen stock market trading for another week from March 14-18, with the exception of some non-open-market transactions using the SPFI payment system.

However, it announced that the foreign exchange market, money market and repo market will be open, according to Reuters.

In a statement on the central bank’s website, it said it will issue a decision on whether trading will open next week, from March 21-15, at a later date.

Putin’s closure of the stock market has effectively frozen trading in the shares of Russia’s largest companies and cut Moscow off from international financial markets.

Jake Cordell, a journalist for the Moscow Times, wrote on Twitter that the move has already wreaked “massive destruction of middle-class wealth” since it was imposed.

He tweeted on Saturday: “Russia’s stock market will be closed for the whole of next week, Central Bank announces. That’s until at least March 21. Shares last traded on Feb. 25.

“Russians have/had 1.35tn roubles invested through private accounts. That was more than $15bn before Russia invaded Ukraine. Down to $10bn just on the rouble devaluation, let alone the share price falls when/if trading opens.

“In short – a massive destruction of middle-class wealth.”

The market was closed in the wake of Russia’s unprovoked invasion of Ukraine, shortly before Western countries clamped down unprecedented sanctions on Russia.

Tough sanctions levelled at Moscow caused the value of shares in Russian companies listed in international markets to plummet.

Although trading has been suspended in Russia, the price of Russian companies listed on stock exchanges in London and New York has plunged into pennies.

Putin’s refusal to reopen the stock exchange is being seen as an attempt to delay the inevitable hit on investors in Russian stocks.

Companies in Russia are bracing themselves for shockwaves caused by the war in Ukraine, with Western sanctions, the pull out of Western investors and disruptions to supply chains all likely to deal major blows to the country’s economy.

New obstacles to importing critical parts and materials will also disrupt Russian companies.

A number of the country’s financial institutions have also been sanctioned, including VITB Bank.

Ten management board members of Russian banks have been sanctioned by the US Treasury on Friday while Russia continued to escalate its invasion of Ukraine, where over two million people have already been forced to flee their homes due to the fighting.

Moscow is increasingly being frozen out from global financial markets. The Bank for International Settlements, known as the central bank for central banks, has suspended Russia from using its services in response to Western sanctions.

The financial measures are crippling the Russian economy, with the country on the verge of bankruptcy.

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Interest rates have doubled in two weeks and the rouble has fallen to its lowest level of all time.

It is predicted that the Russian economy could shrink by seven percent next year instead of the two percent growth that was forecasted before the invasion.

Less generous estimates have said it could drop by as much as 15 percent, which would mark a bigger economic crash than 1998.

Russian citizens are no longer allowed to convert any of their money into foreign currency and have been barred or restricted from spending at businesses ranging from McDonald’s to Apple as increasing numbers of brands boycott the country.

The European Union has also announced plans to drastically reduce its energy dependency on Russia, which would be a major blow to the oil and gas-rich country.

The US and UK have also announced that they will phase out their own imports from Russia, while sanctions will ensure Russia is completely cut off from its main trading partners aside from China and Belarus.

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