Russian Stocks Are Nearly Worthless as Ukraine Sanctions Bite

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Some Russian companies have recently been valued at more than a $100 billion. Now, they are penny stocks.

The London market has doled out severe punishments on some of Russia’s largest businesses. Traders are dumping shares in response to tough new sanctions punishing Moscow for the invasion of Ukraine. 

While Russia’s stock market has been closed for days by order of the country’s central bank, the dollar-denominated secondary listings of Russian companies in London are still trading. The destruction of market value is astonishing. 

Shares in Sberbank (ticker: SBER.U.K.), Russia’s largest bank, have collapsed more than 99% since mid-February, when its stock traded at around $14. In Wednesday London trading, the shares bottomed out at 1 cent and notched an 85% one-day fall.

The bank, which recorded assets of more than $500 billion as of December, had a market capitalization of more than $102 billion six months ago, according to Dow Jones Market Data. It is now less than $190 million, based on a total extrapolated from the London listed-shares.

Similar action was seen across Russia’s energy behemoths.

Stock in the oil giant

Rosneft

(ROSN.U.K.) has crumbled 90% in the past two weeks to be worth less than a dollar, while

Lukoil
’s
(LKOD.U.K.) share price has crumbled some 99.7% over the same period. Lukoil stock touched 25 cents in late-afternoon London trading.

The two companies had a combined market capitalization of more than $140 billion as of September. Lukoil’s market cap stood at just $293 million by Wednesday with Rosneft’s at $9 billion.

The natural-gas powerhouses

Gazprom

(OGZD.U.K.) and

Novatek

(NVTK.U..K.) haven’t been spared. Gazprom stock is down as much as 99.8% since mid-February, touching 2 cents in London on Wednesday. Novatek shares, down a similar amount, ended around 60 cents in London.

Six months ago, the combined market value of these companies was $178 billion. Novatek’s had been reduced to $205 million by Wednesday, while Gazprom’s was $2.9 billion.

The rejection of Russian companies by traders has also been seen in what were once U.K. blue chips—groups with heavy exposure to Moscow that are listed in London and have been constituents of the FTSE 100 index.

Shares in Evraz (EVR.U.K.), the British steel company with primary operations in Russia and Ukraine, have lost 87% over the past month. The group counts among its major shareholders oligarch Roman Abramovich—the owner of the British Premier League soccer club Chelsea F.C.

Anglo-Russian miner

Polymetal International

(POLY.U.K.) has seen its stock price decline 77%. “It may mine gold, but its main customers are Russian banks who sell it on to international gold markets, and with the corporate world increasingly freezing out Russia’s financial sector, investors are fleeing,” said analyst Susannah Streeter of broker Hargreaves Lansdown.

Given the declines in their stocks, both Evraz and Polymetal appear poised to leave the FTSE 100 at its next quarterly reshuffle. The index is comprised of the 100 London-listed stocks with the largest market capitalizations.

Sanctions imposed on Russia by the U.S. and its allies have included excluding some Russian banks from Swift, the global messaging network that is critical to the international payments system. Russia’s central bank is also being blocked from using its reserves of dollars and other currencies to support the ruble, which has plummeted since the invasion.

Market participants have largely been dumping Russian assets, and steering clear of Russian commodities such as oil, to avoid the risk of breaching sanctions.

Write to Jack Denton at [email protected]