Buying Russian Stocks In The U.S. Is Still Impossible — Here's Why

Zinger Key Points
  • For U.S. investors, Russian stocks are now out of reach.
  • On Aug. 8, Russia allowed foreign citizens from so-called “friendly countries” (not the U.S.) to resume trading on the Moscow Exchange.

The Russian economy has been hit hard by global sanctions after the country’s hostile actions began in Ukraine.

Among the many casualties of these sanctions is the Moscow Stock Exchange, which suffered a drop of almost 40% since the invasion.

For U.S. investors, Russian stocks are now out of reach. Several bans are in place which forbid Americans from trading Russian securities. Other measures have locked up the few Russian companies listed in U.S. exchanges.

Here’s everything to know about trading Russian stocks in the U.S.

Trading Russian Companies Listed In The U.S.

On Feb. 28, four days after Russian forces invaded Ukraine, both the Nasdaq and NYSE announced a temporary halt on trading stocks of Russian companies citing “regulatory concerns” and serving as a de facto sanction on the Russian economy.

The Nasdaq stopped the buy and sale of the following companies listed in its exchange:

  • Crypto videogame company Nexters Inc GDEV, a unicorn from Russia behind the games Throne Rush and Hero Wars.
  • Russian online recruitment platform HeadHunter Group PLC HHR.
  • E-commerce platform Ozon Holdings PLC OZON
  • Qiwi PLC QIWI, a Russian company that provides payment and financial services in Russia and the Commonwealth of Independent States.
  • Internet giant Yandex NV YNDX.

The NYSE-listed stocks halted were:

  • Cian PLC - ADR CIAN, a real-estate data company focused on the Russian market.
  • Mining giant Mechel PAO MTL

The stocks were not delisted, but were denied trading on a temporary basis. The halt remains active to this day. The NYSE began delisting proceedings for Mobile TeleSystems (formerly listed on the NYSE as MBT) in July.

Some Russian companies, such as Russian majority state-owned multinational energy corporation Gazprom OGZPY, list its stock in the U.S. over-the-counter market. However, a federal ban currently prohibits Americans from exchanging Russian securities.

In June, the U.S. Treasury Department issued an executive order prohibiting U.S. investors from buying "both new and existing debt and equity securities issued by an entity in the Russian Federation." 

However, U.S. investors are not required to divest such securities and may continue to hold on to them if they were acquired before the ban.

Some Russian companies in the NYSE and Nasdaq could escape this ban because they are headquartered in Cyprus or other European countries. Still, their trade continues to be frozen by the exchanges themselves.

Buying Stocks From The Moscow Stock Exchange

On Feb. 25, Russia banned all foreign investors from trading Russian stocks and operating in the Moscow Exchange, the country’s largest exchange.

On the same date, the central bank shut down all trading, only to resume it one month later for just 33 of the few hundred companies that make up the exchange.

The Russian stock market does not measure significantly in size as compared to the country's economy. It’s estimated that the total size of the Russian stock market is about $400 billion, or roughly above Walmart Inc.’s WMT market value.

As it might have been expected, the MOEX Russia Index fell substantially after the invasion of Ukraine and was saved from total devastation by central bank luck-up measures. Still, today the index has lost over 40% of its value from the week before the invasion.

On Aug. 8, Russia allowed foreign citizens from so-called “friendly countries” to resume trading on the Moscow Exchange, but continued to leave out investors from Europe, the U.S., the U.K. and Japan, among other non-friendly countries.

Photo: Shutterstock
 

Posted In: AsiaNewsPenny StocksSmall CapGlobalMarketsRussiaTreasury Department
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