Page 127 - RusRPTJul22

8.3 Stock market
8.3.1 Equity market dynamics
Over 1mn Russian retail investors are seeing their investment in foreign stocks and other securities worth over RUB2 trillion blocked due to the fallout of Russia’s military invasion of Ukraine, The Bell reported.
As reported by bne IntelliNews, Russian investors were reportedly selling off depository receipts of Russian issuers, fearing that operations with receipts will be blocked after the National Settlement Depository (NSD) was sanctioned by the European Union in the sixth sanction package for Russia’s military invasion of Ukraine.
As of the end of 2021, the number of open foreign securities portfolios on the Saint Petersburg Exchange reached 1.7mn, while total foreign investment of Russia retail players topped RUB2 trillion. Foreign securities accounted for just over 30% of all retail brokerage deals, while SPB Exchange previously banked on the retail investment boom and became the main platform for local investors to acquire foreign shares.
The Central Bank of Russia (CBR) blocked all but the foreign GDRs of Russian issuers (HeadHunter, Yandex, Ozon, Cian, TCS Group and Fix Price) on the SPB. The most recent sixth EU sanction package also targets the National Securities Depository which holds foreign investments, further diminishing the chances of them being unblocked, The Bell reminds.
Out of 1,650 foreign securities traded on SPB Exchange, 995 names have been blocked, affecting 14% of total investment portfolios on the exchange. Anecdotal evidence gathered by The Bell shows that for various investors the share of blocked holdings could vary from 10% to 100%.
While the investors retain their property rights on the securities, the dividends are likely to be accumulated on Euroclear, which is now sanctioned from dealing with the NSD. The sales options are also limited to off-the-market channels with 50% and more discounts.
Notably, at the most recently policy press conference of June 10, Governor of the CBR Elvira Nabiullina said that investors that traded through foreign brokers won’t be able to transfer the proceeds without the permit of a special government commission, effectively putting foreign investments of Russians under strict currency controls and banning trading through foreign brokers until further notice.
127 RUSSIA Country Report October 2020 www.intellinews.com