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imposition of sanctions. As a result, all foreign securities that investors bought on the Moscow Exchange, and 14% of the portfolio on the St. Petersburg Exchange, the main Russian platform for trading foreign shares, were frozen. We have detailed the history of the freeze and the poor prospects for unfreezing these papers here.
The issue of compensation for affected Russian investors is being raised for the first time. Nabiullina said that one option is to create a fund with the participation of the Deposit Insurance Agency (DIA), which could be financed by income from non-residents' funds on the Russian stock market, which the Central Bank froze a few days after the start of the war. The scheme partly "mirrors" the actions of Euroclear, which also receives income from investing the frozen funds of Russians, Kommersant notes.
Later, the Central Bank clarified that the only source of formation of the fund for compensation could be income from investing DIA funds of "unfriendly" non-residents located in bank accounts of type "C" (that is, frozen). At the same time, the scope of non-residents' rights to the funds themselves held in type C bank accounts will not change, the Central Bank said.
The amount of non-residents' money frozen by the Central Bank at the end of February amounted to approximately $312bn, Alexei Timofeev, president of the NAUFOR association, estimated in the summer. If (in the order of pure fantasy) we assume that the DIA will be able to invest all these funds, then at the current dollar exchange rate, it will be possible to compensate citizens for losses of RUB320bn by investing this money for a year at 1.7% per annum. But for this, at least some new legal mechanism will have to be developed to allow the use of this money - this will require the adoption of a special law or presidential decree that could “legitimize the proposed approach,” lawyers interviewed by Kommersant said. However, even in this case, there is a risk that the owners of the assets frozen in Russia “will be able to file claims, including collective ones, within the framework of investment arbitration.”
The MOEX index finished the day in positive territory on September 12, adding roughly 1%. This was despite the fact that nonresidents regained access to the Russian equity market. Meanwhile, volumes were close to average, with around R38 bln traded in the MOEX index. Clearly, the return of nonresident investors did not lead to much selling pressure, at least on their first day back.
8.3.2 Dividends dynamics
● Metal & Mining
Polyus’s BoD recommended AGM not to pay final dividends for 2021. The AGM will be held on 30 September – the recommendation is rather expected given the restrictions against Russian gold and some logistics issues Polyus is facing now. Meanwhile, Turkish steelmakers still experience severe pressure both on cost side and weak demand in exports, which could result in steel output decrease by 5% m/m in September – positive for steel prices (especially for rebar, as Turkey accounts for c28% in global rebar trade). ArcelorMittal
114 RUSSIA Country Report October 2022 www.intellinews.com