The Moscow Stock Exchange continues to break records despite sanctions on its most important companies, including banking giant Sberbank and the world’s largest natural gas exporter, Gazprom. But despite pretty lousy sentiment on all things Russia-related, the Moscow Russia Index is up over 100% in rubles in the last five years. It’s now at a record high.
“It’s actually amazing how well Russia has done given sanctions and sentiment,” says Chris Gaffney, president of world markets at TIAA Bank. “It makes you wonder what would happen if Russia had sanctions reprieve. I think the market would grow like a monster. And if you consider Trump possibly starting a trade war with Europe, then Europe may be the first to lift its sanctions on Russia in retaliation,” Gaffney says, thinking out loud on the possibilities for Russian securities should investor sentiment improve.
The MOEX Russia reached a new historical maximum on Tuesday during intraday trading , hitting 2,599.58 points before selling off slightly when the market closed. The previous intraday record was set on April 10 when the MOEX reached 2591.69 points.
Some U.S. Senators, including Russian hawk Marco Rubio, said that sanctions fatigue has set in. Earlier this year, investors were thinking the Senate would hit Russia with tougher sanctions, including bans on owning Russian sovereign bonds, a step many on Wall Street felt was one step too far. photo credit: GettyGETTY
Sanctions have largely served to shut Russia’s leading banks out of the bond market, making it impossible for them to capture low-interest rate loans in euros and dollars. For oil and gas firms, the sanctions mainly bans U.S. companies from working with the likes of Gazprom and Rosneft, Russia’s biggest oil company, on certain projects. Most of those sanctions target the selling of goods and joint ventures related to offshore drilling operations, or new technologies that would help Russia with horizontal drilling techniques.
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