Russian stock market jumps as foreign investors are blocked from selling

Russia’s stock market surged in its first limited trading session since the West announced punitive sanctions nearly a month ago, but the rally was marred by government action to prevent foreign investors from selling shares.

The benchmark MOEX index rose by around 4%. Only 33 out of 50 stocks in the index were allowed to trade in the shortened session. Russian energy giant Gazprom PJSC rose 13%, while its rival Lukoil PJSC rose 12%. Energy prices have risen since the last trade. Russian bank stocks were mixed despite being the target of sanctions. VTB Bank PJSC fell 5.5%. Sberbank Russia PJSC rose by 3.9%.

The resumption of trade should not be taken as a sign that all is well with the Russian economy. To prevent a sharp selloff, Russia’s central bank banned short selling, where investors bet that a stock’s value will go down, and barred foreigners, who make up a large part of the market, from selling their shares. The Kremlin also directed a Russian sovereign wealth fund to buy around $10 billion worth of shares.

Government action is masking underlying selling pressures. If foreigners could sell, they probably would. Russian stocks listed in London and New York plummeted after the war began, and many were delisted or suspended because of the sanctions.

Foreigners owned about three-fourths of the freely traded stocks in Russia before the war, the so-called free float, and accounted for about half of the trading volume on a daily basis. Without them, Russian stock trading provides limited information about the true value of companies.

“We don’t know what the market is saying at all,” said Charlie Robertson, chief global economist at Renaissance Capital, an emerging and frontier markets investment bank.

The reopening, while limited, is meant to show Russia is getting back on its feet after sanctions to isolate the economy.

The consequences of the tough economic sanctions against Russia are already being felt around the world. WSJ’s Greg Ip joins other experts in explaining the significance of what has happened so far and how the conflict could transform the global economy. Photo illustration: Alexander Hotz

It was also highlighted how the war in Ukraine is being waged on two fronts, military and financial. Just as trading began early Thursday, a White House official attacked it as a “Potemkin market open.”

“Russia has made it clear that it will pour government resources into artificially backing the stocks of companies that trade,” Daleep Singh, the White House’s deputy national security adviser on international economics, said in a statement.

“This is not a real market and not a sustainable model – which only underscores Russia’s isolation from the global financial system,” he said.

Limiting the sale of shares by foreigners will help protect the ruble. If foreign shareholders sold their ruble-denominated shares, they would exchange that money for euros or dollars. This could weaken the ruble’s value as the currency has started to stabilize in recent days.

The limited transactions non-residents can engage in include closing short positions, the central bank said. Closing short positions requires investors to buy back the stock they bet on, which can send the stock price higher.

Since foreigners were excluded, trade was left to local investors. Some may be drawn to stocks as they are seen as a relatively safe haven during times of inflation, as companies can charge their customers more when their costs rise.

According to Sberbank Investment Research, retail investors have historically made up part of the Russian stock market, holding about 7% of the Russian market’s actively traded stocks. According to the exchange, there were more than 17 million retail investors with brokerage accounts on the Moscow Stock Exchange at the end of January.

Economists and investors sought to gauge how much the rally was being driven by investors making new trades versus buying activity that may have been carried over from last month. Some trades placed in late February before the market was suspended had not gone through the formal process known as settlement.

Russia has yet to specify when or how foreign investors will be allowed to operate in the future. A plan under discussion would split trading into separate markets for foreign and local investors, the Wall Street Journal previously reported, citing a person familiar with the matter. Under this plan, investors would continue to face restrictions on moving sales proceeds out of Russia.

“It’s hard for me to imagine a scenario in which someone from the West would return to the Russian stock exchange,” says Christian Kopf, fund manager at Union Investment.


said it would remove Russian stocks from its influential indexes that track emerging markets. Before the war, the MSCI Emerging Markets Index had a 2.8% weighting for Russia. FTSE Russell has also announced plans to remove Russian stocks from its indexes. The moves will force investors whose holdings the indices track to sell — if they can.

Write to Caitlin Ostroff at and Caitlin McCabe at

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