Russia Keeps Stock Market Shut; Ruble Trading Set to Resume

(Bloomberg) — The Russian stock market’s trading halt is being extended in an effort to keep prices from tumbling in the wake of vast international sanctions, while currency trading is set to reopen.

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The Moscow Exchange equity market will remain shut again on Wednesday, the Bank of Russia said in a statement on Tuesday. The trading halt, which began on Feb. 28, is the longest in the country’s modern history.

But trading on the foreign exchange, money and repo markets of the Moscow Exchange will resume, according to the statement. The exchange has not been conducting trading or settlements across all its markets since March 5.

Before the stock shutdown, the IMOEX benchmark index saw its worst weekly slump on record. While the trading halt helped to limit the damage for local stocks, Russian equities listed in London lost more than 90% of their value before getting suspended as international sanctions hit everything from the country’s ability to access foreign reserves to the SWIFT bank-messaging system.

European companies with business exposure to the country have lost more than $100 billion in market value, while global index providers announced plans to remove Russian shares from their benchmarks. Although some investors have now deemed the nation “uninvestable,” Russia has promised to prop up its equity market with up to $10 billion when it reopens.

The plunge in foreign-listed shares of Russian companies is also an indicator of how local equity investors might react when Moscow trading resumes, with some strategists saying the index is likely to fall another 40% to 50% before any bounce from state intervention.

Ruble trading is also a global affair. The currency is both traded round-the-clock in the interbank market and on the Moscow Exchange.

Normally interbank prices around the world reflect prices in Moscow trading, but the Russian invasion of Ukraine has caused the markets to diverge. The ruble lost a third of its value in offshore trading at one point on Feb. 28, its biggest-ever slump, and the drop for the offshore price by early evening that day was six percentage points more than the Moscow price.

(Udates with context throughout.)