Russia to launch stock exchange for sanctioned companies

Companies targeted by Western sanctions will have an opportunity to list their bonds, as Russia plans to create a special stock exchange in 2020 to bolster its national capital markets.

The launch was initially scheduled for December but was then postponed to January, according to Russia's Deputy Finance Minister Alexey Moiseev. The official explained that the ministry needed more time to finish the platform.

At least two companies have already announced that they would like to trade on the stock exchange, Moiseev said, though he did not elaborate further. It was previously reported that the platform will be based on the Saint Petersburg Currency Exchange and will be supported by Russian banks, possibly by Promsvyazbank and the Crimea-based Russian National Commercial Bank (RNCB).

The newly created stock market for sanctioned companies will not work the same way as a classic stock exchange, believes Aleksandr Bakhtin, investment strategist with Premier BCS. In an interview with RT, the analyst explained that the platform is set to work only in the ruble zone, attracting those willing to invest into the firms through specially created infrastructure and helping the companies get additional financing.

“It is not the type of platform that will likely attract new investors, but there are investors already interested in those companies and they get a new [financial] instrument,” he said. He added that companies could issue stocks for certain backers, while foreign investors are likely to avoid participating in it due to Western sanctions.

Narek Avakyan, head of the investment ideas department at BCS Broker, also believes that no investors - at least those having international business - would be willing to risk being hit with secondary US sanctions by buying stocks on the platform. Even with 100 percent confidential transactions, there is always some risk of data leaks, he stressed.

“Those investors who would dare to buy sanctioned financial assets are likely to be targeted by US sanctions regardless of the size of transactions,” the analyst said.

While analysts note that it is not clear so far how exactly the platform will work, it could become a face-saving instrument for companies targeted by sanctions, according to debt market analyst at Ivolga Capital Ilya Grigoriev.

“The platform is more likely to become an image-building instrument for sanctioned companies and also be a transitional phase before listing either on the Moscow Stock Exchange or foreign platforms after sanctions are lifted,” he told RT.

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