Ukraine conflict: Russia shunned as FTSE Russell, MSCI remove stocks, bonds from indices after market becomes ‘uninvestable’
- Feedback from market participants confirmed the Russian market has become ‘uninvestable’ after trading suspension, restrictions on non-residents
- Russia faces an onslaught of Western sanctions after it invaded Ukraine on February 24; trading on Moscow Exchange suspended
FTSE Russell will delete Russian securities from its equity indices from March 7 while MSCI will move Russian securities to “Standalone Market” status from “Emerging Markets” on March 9, measures that are likely to devastate the local market and economy.
The decision was made as the market became uninvestable after the Central Bank of Russia halted trading on the Moscow Exchange and blocked foreign investors from selling. The central bank also restricted its lenders from processing fund withdrawals in all currencies held by foreign clients in retaliation to Western sanctions.
“For most global investors, Russian financial assets have become uninvestable due to moral or compliance reasons,” Yan Wang, chief emerging markets and China strategist at Montreal-based Alpine Macro, said in a March 2 report. “The Kremlin’s recently imposed capital account controls also make foreign holdings of Russian assets highly risky.”
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