Among the few Russian shares nonetheless buying and selling on a world alternate are altering fingers at a blistering tempo in Hong Kong, however merchants say US banks refuse to the touch them.
In contrast to most large Russian corporations, aluminium producer Rusal will not be on worldwide sanctions lists. Weekly buying and selling volumes in its shares have shot up virtually 600 per cent in Hong Kong since Russian president Vladimir Putin launched his invasion of Ukraine.
Market contributors mentioned US lenders within the metropolis, together with Goldman Sachs and Citigroup, are declining to take part in transactions involving the inventory, echoing the self-imposed sanctions which have unsettled the worldwide oil market and highlighting the difficulties Russian corporations may face in accessing western capital markets even when US and European sanctions are lifted. Each banks declined to remark.
However the brisk turnover in Rusal’s shares, facilitated by native brokers, displays Hong Kong’s position as a refuge for corporations dealing with geopolitical stress from the west.
“The American banks gained’t commerce it,” mentioned a Hong Kong-based dealer at one Chinese language funding financial institution. “However in the mean time, we might.”
For the reason that struggle started, Rusal has had about $10bn wiped off its market worth. Russia’s central financial institution, which has repeatedly suspended markets within the identify of monetary stability for the reason that invasion, has halted all inventory buying and selling in Moscow for not less than one other week, leaving the benchmark Moex index frozen with an virtually 35 per cent loss for the yr so far.
On February 28, the New York Inventory Alternate and Nasdaq halted all buying and selling in Russian equities within the wake of sanctions on Russian monetary establishments from the US and Europe. The NYSE mentioned its buying and selling halts have been because of “regulatory concern”.
The London Inventory Alternate adopted go well with days later, suspending buying and selling in 27 corporations linked to Russia, together with the lender Sberbank and power group Gazprom.
That leaves Hong Kong-listed Rusal shares as one of many few remaining methods to position trades regarding Russia.
An govt at one Wall Avenue financial institution mentioned US lenders have been avoiding Rusal over issues buying and selling in its Hong Kong-listed shares may very well be halted with out warning, as had occurred to the corporate’s world depositary receipts in London.
“That was performed with none discover and so there have been a bunch of trades caught unsettled,” the chief mentioned, including there was “a good quantity of shopper publicity” because of this.
Hong Kong Exchanges and Clearing declined to say whether or not it was contemplating a buying and selling halt for Rusal, including it didn’t touch upon particular person corporations. However an individual conversant in the alternate’s pondering mentioned so long as issuers made satisfactory disclosures, “there’s no cause these corporations have to be suspended”.
That method has allowed Hong Kong to supply a venue for state-run Chinese language issuers hit by US sanctions over alleged army ties, akin to China Cellular and China Telecom. Each corporations nonetheless commerce freely within the Asian monetary hub regardless of being pressured off Wall Avenue final yr.
Louis Tse, managing director of Hong Kong-based Rich Securities, mentioned Rusal shares had been buying and selling “fairly closely” in current weeks due to “bottom-fishing by short-term merchants”.
“They don’t care which financial institution is buying and selling the inventory,” Tse added. “They like to purchase them at all-time low costs, experience the brief time period rebound and dump the shares.”