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Russian stock prices plummet in face of conflict


Russian stocks have plummeted in trading whilst the country focuses its attention on their conflict with Ukraine, and with Moscow’s debate on whether to launch an invasion.

The Molex index (Russia’s Market Index) has decreased by as much as 14.2% after Moscow destroyed two Ukrainian military vehicles that had crossed Russia’s barriers and entered their territory. This became Russia’s first direct clash with Ukrainian forces since Moscow mobilised 190,000 troops on its border.

The index closed the major trading session down 10.5% — the largest fall within one day since 2014 when Russia seized Crimea.

“It does feel like the market isn’t quite panicking but that it has moved into a stronger form of risk aversion,” Altaf Kassam, Head of Investment Strategy and Research at State Street, says. “There’s a feeling that Russia could escalate and take us over a cliff edge, [when] before it felt like Russia was as incentivised as the west to calm things down.”

Since the beginning of January 2022, there has been a drop of almost 30% in the shares of Russia’s leading oil producer, Rosneft.

Alongside this, Gazprom (a state-owned gas producer), declined almost 16%, before trimming some losses, which takes the total fall for 2022 to 19%.

The president of the USA, Joe Biden, is doing all he can to de-escalate the tensions on the Ukrainian border by holding a summit with Putin. However, mere hours later, there was news that Russia had destroyed two Ukrainian infantry fighting vehicles, which killed 5 people.


Boris Johnson also vowed to impose economic sanctions and prevent Russian companies from raising money on UK markets, in the case that Moscow escalates its advances and invades Ukraine.

Russian government bond prices also tumbled on Monday, pushing yields to their highest level of the current crisis. The yield on Russia’s dollar bond maturing in 2030 climbed three-quarters of a percentage point to 5.14 per cent, up from just above 2 per cent at the start of the year.

Ukrainian yields also surged, with the yield on a dollar bond maturing in 2032 up more than half a percentage point at 11.1 per cent.

Furthermore, in currency markets, the Russian ruble fell 3% to trade, at 110 to the pound sterling; its weakest level since October 2020.

 

Written by Jade Andrew

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