Page 116 - RusRPTOct22

Starting September 12, the Moscow Exchange will open access to trading for non-residents from friendly countries. Most likely, this will have a neutral effect on the Russian market, since a significant part of the securities is stilled banned for non-residents. In the medium term, we expect the Moscow Exchange index to head north. Brent futures are trading above $91/bbl, though a knee-jerk pullback is possible. Macro data releases are scarce today – UK is set to release July industrial production stats.
MOEX restricts new share supply. Published list of restricted shares to trade suggests potentially smaller impact from new share supply on the market given that it represents c40-50% of index weight and latest trading volumes.
List of restricted shares expanded. On Friday, MOEX announced expansion of the list of securities of strategic and a number of other enterprises that are subject to trade restrictions for non-resident clients under the control of Russian legal entities or individuals. Furthermore, it highlighted that the list is for informational purposes, may change and cannot serve as the only source of information about the list of enterprises subject to restrictions.
53 shares on the list. The list consists of 53 shares, both ordinary and preferred, of state-controlled and private companies. Fourteen of these shares are constituents of the Russia flagship IMOEX/RTS index with a total weight of 37.7% as of Friday close. Based on the trading volume on Friday, these names accounted for 43.6% of total trading volume.
Half of trading volume in most liquid names. The largest mentioned heavyweights are Gazprom, Norilsk Nickel, Rosneft, both types of shares of SurgutNG and Tatneft. Among the top 10 most liquid names on Friday, these shares accounted for 50.4% of all trading volume as ALROSA and Polyus are also on the list.
Restrictions of new share supply may change / expand further. Not only no specific reasons on the list composition have been announced, but also it was explicitly stated that the list may change or expand further. This leaves us with an impression that there may be some potential / reported significant share overhang in these names, and by restricting Russia-controlled entities to trade them starting this week, regulators are trying to prevent stock oversupply and unusual market volatility. If true, one could speculate on further expansion of such list should new supply appears on the market at some future point.
116 RUSSIA Country Report October 2022 www.intellinews.com