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The Russian market has reacted to new US sanctions by falling major indicators

On the morning of April 9, transactions with shares of Russian Aluminum (Rusal) Oleg Deripaska started trading on the Hong Kong stock exchange with a large-scale drop, reaching up to 50% of their value at the time of the opening of the exchange.

A few hours later, when RusAl shares started trading on the Moscow Stock Exchange, they quickly lost about 40% of the value, but they recouped and stabilized the fall in the region by 24%.

After the shares of “Rusal”, other companies not included in the US sanctions lists began to become cheaper. The most striking was the fall in the shares of the mining company Mechel – about 32% (recouped up to about 13%). Approximately 18% and 14% also lost “Sberbank” and “Rosneft” , later rose to a mark of -12% and -5.7% respectively.

Schedule of shares prices of Mechel. Screenshot of the site of the Moscow stock exchange
Share price chart of PJSC “Sberbank”
Share price chart of PJSC “Oil Company Rosneft” »

The fall in the shares of the country’s largest bank and the largest commodity companies led to a record decline in the two main exchange indicators – the Russian Commodity Exchange (RTS) and the Moscow Stock Exchange (the former MICEX). In the first hours they lost 11.5% and 9.1% respectively.

Graph of the RTS index
Schedule of the MICEX index

The national currency also suffered from the blow to Russian stocks . For the first hours, the growth in the ruble-dollar and ruble-euro pairs was about 3.5-4%. Rates of major foreign currencies for the first time since 2016 amounted to more than 74 rubles for the euro and more than 60 rubles for the dollar.

President’s press secretary Dmitry Peskov redirected to the government questions about the sudden collapse of Russian markets. Deputy Prime Minister Arkady Dvorkovich promised that the companies that got into the US sanctions list will be supported.

According to analysts, which refers to the service ForexPF, the Russian market is unlikely to recover from panic auctions. They also pointed to the threats of US President Donald Trump to introduce new sanctions against Russia in connection with the events in Syria. The service also brought the opinion of the dealer of a large Western bank, which does not expect “a significant weakening of the ruble”.

Citigroup analyst Barry Ehrlich said that, following Rusal, the world’s second-largest aluminum producer, any Russian company could be added to the sanctions lists. The hardest of all, according to Erlich, will be affected by more vulnerable public companies (like Rosneft or Sberbank).

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