Foreign investors eye return to Russian markets amid reopening rumors

Foreign investors are exploring alternative avenues to purchase securities of Russian companies amid rumors that Russian financial markets will reopen to international markets within a few weeks.

According to a Bloomberg report, interested parties are accumulating shares of Rusal on the Hong Kong stock exchange for this purpose. This activity led to a 75% increase in the value of these shares in February.

Shares of Austria-based Raiffeisen Bank International (RBI), which has a subsidiary in Russia, have risen by 35% on the Vienna Stock Exchange this year, while shares of Hungarian OTP Bank Nyrt, which remains in the Russian market, have gained 11% since the beginning of the year.

Grigory Marinichev, a partner and securities lawyer at the New York-based law firm Morgan, Lewis & Bockius, told Bloomberg that the wave of demand for securities of Russian companies or foreign companies doing business in Russia is being driven by hedge funds and private investors.

Marinichev stated, “They want to be the first in this trade. But at the moment, we can’t tell them anything other than to follow the news.”

Bloomberg also noted a positive trend in Russian stock exchanges, with the ruble appreciating by 15% against the dollar since the beginning of the year.

The report mentioned that many investors are warning their clients against excessive expectations regarding Russian assets.

It was emphasized that caution is necessary due to the uncertainty surrounding the details of easing US sanctions, especially since some restrictions are determined by law and require Congressional approval. Additionally, European Union sanctions remain in place.

Alexander Kolyandr, a former strategist at Credit Suisse’s Moscow office, commented, “It will take years for Russia to become attractive for investment again. But right now, it’s hard for people to find good investment ideas, and a possible peace agreement creates clear opportunities.”

US President Donald Trump had stated that he did not rule out lifting sanctions against Russia once the conflict in Ukraine is resolved, but that the time was not yet right.

The Moscow Exchange recorded the highest trading volume in the stock market since March 2022, following a phone call between the Russian and US presidents on February 12.

An all-time record was broken during the evening session of February 12 and the morning session of February 13.