The London Stock Exchange has suspended trading in a further 27 companies with strong ties to Russia as the impact of sanctions cascades across global financial markets.
Before the market opened on Thursday, the LSE said it was suspending trading with immediate effect in more than two dozen companies, including En +, Sberbank, Gazprom, Lukoil and Polyus.
The exchange said it was in connection with “events in Ukraine, in light of market conditions, and in order to maintain orderly markets”.
Separately, the LSE’s index business, FTSE Russell, said Russian stocks will be deleted from all of its equity indices from the open trading on March 7.
The move marks a stark split from the past two decades when London became the primary offshore hub for Russian companies and oligarchs to do business. Thirty-nine companies have listed on the LSE and raised $ 44bn since 2005, according to data from FactSet. But the flood of listings dried up after 2014 when sanctions related to the annexation of Crimea from Ukraine began to affect Russian companies looking for funding.
Trading in Russian stocks and bonds on global markets has ground to a near-standstill over the past week as traders grapple with the impact of a barrage of financial sanctions on Russian companies and individuals, and countermeasures from Moscow.
The Russian central bank has suspended stock and derivatives trading in Moscow this week while authorities have also temporarily barred foreign investors from selling their Russian assets.
Even so, London had continued to trade Russian names and the value of many stocks such as Sberbank and Gazprom have plummeted. Traders said attempts to unwind clients’ positions in Russian stocks – as demanded in some sanctions – were hobbled by brokers not wanting to trade Russian names.
“The level of sanctions here is unprecedented and very dynamic,” said David Schwimmer, chief executive of the LSE Group. “We are highly engaged with the regulators and other authorities in terms of making sure that we are complying with the sanctions and doing everything we can to help.”
He also defended the decision to keep the trading of Russian stocks on the LSE open, pointing to US sanction demands that allow international investors three months to exit their Russia positions.
“When you think about the secondary trading of equities, that is not providing any support to those companies or to the Russian government. It is not allowing them to raise any capital. If anything, it is allowing international investors to get out of those positions. ”
Its operations in Russia and Ukraine account for less than 1 per cent of total income, which hit £ 6.8bn in 2021.
FTSE Russell said Russia index constituents that are listed on the Moscow Exchange will be deleted at a zero value. Any Russia global depositary receipts – certificates that allow investors to bet on Russian stocks on global markets – that are suspended as of this Friday will also be deleted at a zero value.
Earlier this week the Financial Conduct Authority, the UK markets regulator, suspended the London quote for VTB, the Russian bank. Also included on Thursday’s list was PhosAgro, the fertilizer group chaired by Xavier Rolet, the former chief of the LSE Group.
Many Russian companies trade in London as depositary receipts. However the list also included Fix Price, the discount retailer, which is traded on the main market. Some Russian names, such as food retailer Magnit, remain available to trade on the LSE.
Overnight index provider MSCI said it would drop Russian stocks from its widely tracked emerging markets indices, warning that the country’s equity market had become “uninvestable” after its invasion of Ukraine resulted in crippling sanctions.