Trading halted on plunging Russia stocks: What’s next?

Posted: 4 March 2022 6:56 am
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Trading has been halted on falling Russian stocks listed in London and on the NYSE and Nasdaq. What does that mean if you own shares?

Investors who own Russia stocks face not only plunging values since the Ukraine invasion, but can’t trade them at all. At least for now.
Russia’s London-listed stocks, which include some giant companies, lost almost all their value by Thursday. The price of shares in Sberbank, Russia’s biggest bank, was down 99.72% year-to-date — trading for around a single penny. Meanwhile, shares in natural gas company Gazprom had fallen 93.71%.
The situation had become so critical that the London Stock Exchange decided to act to “maintain orderly markets,” stopping trading in 27 companies.
The NYSE and Nasdaq took similar action, suspending trading in a handful of Russian-linked stocks listed in the US. They are relatively small compared to the Russia-based companies listed in London.
The NYSE-listed stocks halted, according to Reuters, were Cian PLC (CIAN), Mechel PAO and Mobile TeleSystems PAO. The Nasdaq-listed stocks halted are HeadHunter Group PLC (HHR.O), Ozon Holdings PLC (OZON), Qiwi PLC (QIWI) and Yandex (YNDX).
And today, trading was suspended in three plunging exchange-traded funds invested in Russian holdings. The IShares MSCI Russia ETF (ERUS), for example, has lost 82% of its value.
US-based index provider Morgan Stanley Capital International (MSCI) says that Russian stocks are “uninvestable” in the wake of the invasion.
So what’s an investor to do? For now, wait.

What the hold means

Basically, the hold simply means that any of the Russian listed stocks included in the suspension will no longer be traded on exchanges. The move has no bearing on the value of the stocks. But you can’t buy or sell.
A decision like this will have a ripple effect on the market — something we’ve already seen from key players. BlackRock, which issues iShares ETFs, had already announced it would stop issuing new shares of ETFs tracking Russian stocks, while MSCI said that Russian securities would be removed from its indices on March 9 at a price “that is effectively zero.” It also said it would reclassify the MSCI Russia index under “Standalone Markets” rather than “Emerging Markets.”

With no timeline for how long sanctions will last, and when, or even if these shares will return to the exchange, investors should examine their portfolios to measure their exposure.

What can investors with Russian stocks do?

The question for those investors who do hold Russian stocks is: What can they do?
The harsh reality is that they can only wait, and may have to write these off as a loss.
Suspension of a company’s stock does not necessarily mean the value of the shares is zero. But in this case, one of the reasons for the suspension is because of how much the value of these shares has plummeted in the past week. Investors have already taken a hit.
Investors will maintain ownership, and the hold could turn out to be temporary. But there has been no mention of when, or even if, Russian companies might trade again.
Another worry: Russia has closed its stock market for the past week, and shares there are expected to plummet when it eventually reopens.
The worst case scenario: Shares end up worthless, leaving investors only to seek some way to use the loss for a tax cut.

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