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Russia orders block on foreign clients' bids to sell Russian securities
- azalemeth 5y agoWhat does this mean, practically? Market paralysis -- 0 volume, but the "buy price" maintained?
- throwawayay02 5y agoI get it's like the freezing of ~40% of Russia's foreign reserves the US announced. So still the property of their owners - not seized - but cannot be moved either.
- londons_explore 5y agoThis is seizure in all but name. By 'freezing' US dollars indefinitely, you effectively take them out of circulation, allowing you to print the same number of new dollars for yourself without causing inflation.
- spacemanmatt 5y agoI don't think there's a guarantee the price will be maintained.
- woodruffw 5y agoI'd also like to understand this: how does Russia intend to prevent foreign clients from making direct sales of securities to other foreign (or even domestic) clients? Are they saying that they just won't honor those sales? This sounds like a terrific way to have foreign companies value their Russian assets at near-zero, since it's not clear whether they're actually still securities at that point.
- unfocussed_mike 5y ago> This sounds like a terrific way to have foreign companies value their Russian assets at near-zero, since it's not clear whether they're actually still securities at that point. This is my take -- I'm confused by it because I can't believe this is actually it. But it could be that the central bank is implementing the only token measures it actually can take, to be seen to attempt to satisfy an otherwise impossible, maybe even deranged demand for wish-fulfilment from the Kremlin. I feel that not enough time is yet being spent asking the question: what if this is all not just figuratively the work of an insane person, but actually the work of an insane person?
- eropple 5y agoThis strikes me as a prelude to seizure of foreign-owned assets. In that light, locking trades seems obvious.
- woodruffw 5y agoMaybe, but I think that's pretty unlikely at this juncture: not only are there not a lot of assets they could seize punitively (I assume the Kremlin is not looking to make enemies out of hitherto neutral countries like India), but any seizure would take Russia's financial status from "pariah, but quantifiably risky" to "unquantifiably risky."
- eropple 5y agoInvading neighbors and rattling your nuclear saber in a world with MAD probably ought to take you to "unquantifiably risky" already.
- gitfan86 5y agoRight, if France takes an oligarch's house and boat in Nice, why not take a French billionaire's assets in Russia and give them to that Oligarch? Stock in a gas company may not make up for the loss of a house and yacht but it is something.
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- cm2187 5y agoIf it is a security you still need to clear the sale with the exchange within a short period of time, even if you made the sale off market.
- trhway 5y agoLooks like the Moscow stock exchange will continue working, while the foreigners wouldn't be able to sell through the accredited brokers. I don't think the direct sales are possible without actual stock certificates, and most stock is traded through the broker accounts without clients getting the certificates.
- woodruffw 5y agoFor some definition of working, I suppose -- having a large portion of your capital base unable to exercise trades fundamentally undermines trust in the exchange itself.
- VincentEvans 5y agoOhh gee, what are the securities of the nation that threatens the world with nuclear war are worth for the plethora of buyers clamoring to invest? I suspect they are worth as much as Russian promises of honoring their treaties, contracts, and obligations.
- Uehreka 5y agoNot invest, divest. They’re trying to stop Western funds from selling off their interest in Russian companies.
- londons_explore 5y agoI'll happily buy them all for 1% of the face value last week.
- Jabbles 5y agoWhilst 1% is obviously not the price the market currently values them at, do remember that many Russian stocks went to 0% in 1998. Buying at 1% would still have meant you lost all your money. https://en.wikipedia.org/wiki/1998_Russian_financial_crisis https://en.wikipedia.org/wiki/1998_Russian_financial_crisis
- tenpies 5y agoIf it weren't for a moral consideration and a very long tail risk of an involuntary shareholder meet up at a prisoner camp as the West's decision-making is further compromised by emotion, there are company that everyone should be lining up to buy. The book value of many of these resource and agriculture companies is very far from zero. Even with the West's self-destructive energy policies and "let them eat inflation" approach to monetary policy, the continued long-term operation of these companies should be of interest to anyone that likes avoiding mass scale social unrest. I really wonder if 2 years from now when there's famine and and people are huddling at a community warming centre in the dead of winter because private heating is a luxury good, people will buy the "it was Putin's fault" and "it's worth it for the environment".
- stadium 5y agoWhat are the goals of this action? Is this to prevent a fire sale from foreign institutional holders who are exiting their positions in Russian securities?
- rmbyrro 5y agoThis is madness. If they keep on this track, in about 20-30 years they'll become an Argentina.
- gpm 5y agoMaybe also preserving the ability to seize these assets from foreigners, instead of letting them convert it to cash and move their wealth beyond Russia's reach?
- jopsen 5y agoThis seems more like discriminating based on nationality. So far no sanctions are seizing assets of ordinary Russians.. nobody is even talking about this.
- forum_ghost 5y agoAre you sure? I see many reporting their personal balances frozen by foreign institutions, and outright refused to return. All sanctions mostly hurt regular people. I'm sure the sudden drop in the FX rate will hurt those living paycheck to paycheck the most, instead of the rich who don't even hold any currency, just valuable assets. Seizure of central bank foreign reserves on this scale (600 BILLION), I believe, is entirely unprecedented? All it's going to do it hurt the poor. Oligarchs are going to be A-OK.
- eifec 5y agoThis was not only talked about but there are now draft laws in the EU about exactly that Article 1c 1. It shall be prohibited for Union central securities depositories to provide any services as defined in the Annex of Regulation (EU) No 909/2014 of the European Parliament and of the Council\* for transferable securities issued after 12 April 2022 to any Russian national or natural person residing in Russia or any legal person, entity or body established in Russia. 2. Paragraph 1 shall not apply to natural persons who are nationals of a Member State or having a temporary or permanent residence permit in a Member State Article 1d 1. It shall be prohibited to sell euro denominated transferable securities issued after 12 April 2022 or units in collective investment undertakings providing exposure to such securities, to any Russian national or natural person residing in Russia or any legal person, entity or body established in Russia. 2. Paragraph 1 shall not apply to nationals of a Member State or natural persons having a temporary or permanent residence permit in a Member State https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022D0327 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELE...
- jacquesm 5y agoThat assumes there are buyers.
- londons_explore 5y agoThere will always be buyers. But the price might not be what the government wants to see...
- meepmorp 5y agoIf the prices are right, there's bound to be buyers. If you can get some of BP's stake in Rosneft for kopeks on the ruble, why not throw some cash at it?
- ianai 5y agoAh but are there buyers if the country has demonstrated not only instability but hostility to everyday business and property rights? I get that there very well may always be someone on the other side of a financial stake. But a country signaling they won’t respect property rights is a huge red flag that business will flee.
- 41b696ef1113 5y agoMeh. If I had to opportunity to purchase a Russian energy company for 0.1% of what it was valued a year ago, sure why not throw $100 at it? Still a large gamble, but plenty of eager buyers willing to throw some disposable income at the chance.
- nine_k 5y agoWould you invest into, say, Iranian oil industry, given a chance to do it very cheaply? I'm afraid that political / systemic risks are too high to invest more than a token amount.
- ukraineally 5y ago>If the prices are right, there's bound to be buyers. If you can get some of BP's stake in Rosneft for kopeks on the ruble, why not throw some cash at it? You get ownership in something that might not exist in the future? Your money, your risk. Feel free I guess. If you're expecting putin to be assassinated and the war to come to an end in a few days. Might make sense... but you're better putting all your investment in lottery ticket, it's lower risk.
- deleted 5y ago[deleted]
- duxup 5y agoThey want those assets for themself?
- vmception 5y agoDo what you gotta do. Amounts this large though can reveal unexpected exposure for a lot of institutional banks and investors. Although Russian securities market is not that large, it can be just a big enough hole in balance sheets, I think governments will bail them out institutions experience stress over, good luck all!
- mhh__ 5y agoI'm guessing that hump in the Russian yield curve is about to be more like the Burj khalifa than a camel
- ukraineally 5y ago>I'm guessing that hump in the Russian yield curve is about to be more like the Burj khalifa than a camel There won't be a curve, it will be a yield cliff taller than the burj. Mind you, they were already at 10% interest rates and inflation. Economists are going to need to invent new words for how much of a failure the Russian economy will be. People might as well not go to work, they know their employers wont be paying them; even if they did pay them, the amount will be meaningless. Might as well take to the streets. But dont worry, russian central bank says they are solvent... despite the reality that max withdrawals are $20 and lineups are very long. LOL!
- SeanLuke 5y agoReuters is paywalled, but is getting dumped on HN by the metric ton. Can we find a more friendly news source?
- d4v3 5y agoIt's actually not a paywall--just a register-wall. And IMO Reuters is a pretty good news source since it is about as neutral as they come.
- firstcommentyo 5y agoDon't like it either but was curious enough to look it up this time: https://web.archive.org/web/20220227225929/https://www.reuters.com/business/russian-cbank-orders-block-foreign-clients-bids-sell-russian-securities-document-2022-02-27/ https://web.archive.org/web/20220227225929/https://www.reute...
- octoberfranklin 5y agojust turn off javascript
- SeanLuke 5y agoDid you actually bother to try before making such a comment? Turning off JavaScript on Reuters usually results in the entire page being a giant piece of the splash image.
- octoberfranklin 5y agoScroll down. Yes, of course I tried it, my browser is javascript-off-by-default. You'd be amazed how many websites not only still work, but actually work better. A lot of news sites have this glitch where turning off javascript results in a mis-scaled hero image. Just flip on reader mode, which scales all images to page-width. Problem solved. Key bindings for javascript-opt-in and reader-mode are highly recommended. Very easy to add to qutebrowser.
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- throwthere 5y agoWell I guess now BP can't exit its Rosneft position based on that other thread on the front page. For individual investors, I wonder how many shares are held on foreign exchanges where this won't effect them. And for institutional investors, I wonder how many are held a western clearinghouse where this also won't an effect.
- kasey_junk 5y agoThis is a fairly obvious ploy to lock up liquidity and make sure no trades are on the ticker. With no trades on the ticket prices will look stable to naive participants but the spread will get gigantic. The smart money will still be exiting fast.
- woodruffw 5y agoI wonder who the naive participants would be in this case. Russia's institutional investors would presumably know better, no?
- kasey_junk 5y agoCorrect. This is purely for the “yahoo” equivalent consumer market. Russia listed equities are effectively frozen at this point.
- cyanydeez 5y agoexcept, how is it liquid if they cant divest.
- fuoqi 5y agoLooks like a reasonable response to "freezing" (read, seizing) assets of the Central Bank of Russia and the credit rating downgrades. Not only it plays role of deterrence to some extent (destabilize our markets and your investors will suffer), but also significantly limits amount of liquidity which will be able to leave the Russian market, thus helping to support their currency.
- tablespoon 5y ago> Not only it plays role of deterrence to some extent (destabilize our markets and your investors will suffer) IMHO, that's not a bad thing. Investors and companies should be more cautious about getting enmeshed with authoritarian regimes, but they're not going to learn unless their choices blow up in their face.
- YaBomm 5y ago
- sega_sai 5y agoI think this actually has much less to do with "protecting" the stock market (as discussed in comments), than protecting the ruble. Because for sure the majority of foreign investors will want to sell their securities ASAP and exit the market in USD, not rubles. And therefore that'll create a large pressure on the ruble.
- kazinator 5y agoYeah, nothing preserves value like meddling in the market to ban dumping.