Page 115 - Russia OUTLOOK 2023

At the end of 2021, Russian shares were the best performing in the world, but
that changed abruptly after the invasion of Ukraine. In 2022, the quotes of
almost all Russian securities showed a significant decline and foreign investors
have been barred from withdrawing their money completely.

In the first week of the new year the government announced that foreign
investors could only withdraw their money if they were willing to sell them at a
50% discount. And even then, the proceeds of a sale would be converted into
rubles and held in special bank accounts. If the investor then wanted to
expedite repatriation and take this money out of the country in dollars – for
which special permission from the Central Bank of Russia (CBR) is needed –
then the investor would have to make an additional “voluntary” contribution to
the budget of 10% of the value of the shares.

On top of the crash in share prices, a number of companies refused to pay
dividends, which also led to a reduction in the yield of securities for investors.

The annual returns from Moscow exchange index since the beginning of the
year have been approximately minus 40%, BCS GM reports. This is the worst
indicator since 2008, when the index fell by 60%.

The maximum drop was observed in companies that suspended the payment
of dividends, led by Russian banks, which the CBR advised to cancel
distributing profits by dividends.

For example, the shares of state-owned VTB fell by 66% over the year, and its
sister bank Sberbank was down by 52%.

In addition, there was a significant drop in technology companies. The shares
of leading employment agency HeadHunter fell by 69% and tech giant Yandex
plunged by 60%. National airline Aeroflot was down 58% and gold miner
Polymetal by 72%.

The shares of companies that earn the majority of their revenue in the
domestic market turned out to be more stable. Supermarket giant Magnit saw
its shares tumble by only 20%, while leading mobile phone company MTS took
a 21% hit. The shares of fixed line operator Rostelecom were down by 35%.

A few shares even gained in value. Fertiliser maker PhosAgro saw its shares
rise by 7%, as fertilisers have been exempted from sanctions as part of the
efforts to avoid a global food crisis.

115 Russia OUTLOOK 2022 www.intellinews.com