Nearly $200 billion wiped out Moscow stocks in fifth-worst market rout Business

Shares on Moscow’s stock market lost a third of their value in one of the worst slumps in history on Thursday, as Russia’s central bank rushed to save the ruble after it hit lows record.

Investors rushed for the exit in Russian markets as nearly $200bn (£150bn) was wiped off its shares after Western powers imposed new sanctions on Moscow.

The Bank of Russia decided to stabilize the ruble after it plunged as much as 10%, using a huge hoard of $600 billion in foreign exchange reserves.

The central bank launched emergency measures with its first foreign exchange intervention in years and bolstered liquidity in its banking sector. He also imposed a ban on short selling to prevent speculators from taking advantage of the stock market’s fall.

However, forecasters have warned that Russia’s attempts to soften the impact of sanctions may not fully protect its economy.

Moscow’s MOEX stock index fell 33% in a single session as investors fled Russian assets, a fall that is the fifth-worst in market history.

The decline wiped out about $190 billion from blue-chip Russian stocks and the index shed half its value in just three months.

Only the stock market routs in Argentina in 1990 and 2019, Kazakhstan in 2002 and Mongolia in 2014 were worse, with Thursday’s fall matching Hong Kong’s fall the day after Black Monday in 1987, according to Bloomberg data.

Russia-related stocks around the world have been punished by investors. In London, miners Evraz and Polymetal International lost 30% and 38% respectively.

Yandex, Russia’s answer to Google, halved in value on New York’s Nasdaq, while e-commerce giant Ozon lost more than 30%.

Rabobank’s Jane Foley said the central bank’s foreign exchange reserves were “part of an effort by the Russian authorities to reduce their dependence on Western institutions and soften the country’s sensitivity to Western sanctions”.

Liam Peach of Capital Economics said Russia’s economy is in “a much stronger position to withstand Western sanctions than it was in 2014”, but could still cause real damage.

He said the central bank has “lots of foreign exchange reserves it can use” to support the ruble after helping stabilize Russian markets.

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This notice was published: 2022-02-24 18:36:38

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