Russian Stocks Give Up Gains in Second Day of Limited Trading

(Bloomberg) — Russian stocks fell on Friday, reversing most of the gains made in the previous session when the market reopened following a record long shutdown, while government measures to prevent a selloff helped limit the losses.

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The MOEX Russia Index closed 3.7% lower after climbing 4.4% on Thursday. Gas giant Gazprom PJSC led losses with a 12% slump after the U.S. and the European Union reached a deal to cut dependence on Russia for liquefied natural gas.

The gauge had climbed in Thursday’s shortened session and Friday’s declines were limited as the Russian government took measures, including preventing foreigners from exiting local equities and banning short selling, to avoid a repeat of the 33% slump seen on the first day of the Ukraine invasion last month. Russian equities are the world’s worst performers so far this year.

Earlier this month, the government announced that as much as $10 billion from the National Wellbeing Fund may be spent to buy battered local stocks. Russia has so far refrained from using its sovereign wealth fund, Bloomberg reported on Friday.

Russia is slowly reopening its equity trading after suspending it from Feb. 28 until yesterday after the nation was hit with unprecedented sanctions, spanning everything from its ability to access foreign reserves to the SWIFT bank-messaging system.

The Moscow Exchange on Friday held trading in 33 shares on the MOEX index, while stocks outside the benchmark traded in a special negotiated mode. Oil producer Lukoil PJSC dropped with crude prices and lender Sberbank PJSC also slipped, while fertilizer producer PhosAgro PJSC gained along with Novatek PJSC,

“Yesterday, the main theme was hot money searching for tactical buying,” said Dmitry Polevoy, an analyst at Locko-Invest in Moscow. “Today, we see some selling plus more activity from people who stayed aside yesterday seem to be driving the move.”

“Price-discovery will take time as it is hard to correctly assess new fair prices. The sanctions story is still open-ended.”

Some market participants have warned against reading too much into this week’s market moves since foreigners, who were restricted from selling, hold more than half of the Russian stock market’s free float. The White House slammed the partial resumption of the equities trading, calling it a “Potemkin market opening,” saying it’s not a real market.

Still, some say local retail traders could be buying shares as an inflation hedge, and the Moscow Exchange said the share of individual investors in Thursday’s trading volume was 58%.

READ: Russia Puts Floor Under Stock Market Selloff as Trading Resumes

The ban on sales by foreigners shielded the local stock market from a deeper rout after the nation’s equities were excluded from global benchmarks and exchange-traded funds tracking the country’s shares were frozen. European companies with business exposure to the country have lost more than $100 billion in market value since the war as risks surged and Russian companies’ global depositary receipts slumped more than 95% before being halted.