The Russian stockmarket has reopened for equities trading but it’s not trading that resembles anything an investor in London, New York, Sydney or Melbourne would recognise.
From Friday, when foreigners will be able to sell, it might become more meaningful, although the sellers won’t be able to shift any proceeds out of the country. Most foreign institutional investors have already written down their Russian holdings to zero. That’s what caused the US deputy security adviser, Daleep Singh, to describe the past few day’s trading as a “Potemkin market opening”.
A week ago trading in Russia’s domestic bonds recommenced with heavy Bank of Russia interventions, with foreign investors effectively locked out of the market. The fact that the overwhelming majority of investors in the market can’t sell and there is a state buyer with explicit instructions to prop up the market means it isn’t a real market but an illusion of one.Vladimir Putin has been trying to create structural support for the currency by unilaterally demanding that customers for Russian gas from “unfriendly” countries, which would force them to buy the currency and prop up its value.