Moscow’s revamped stock exchange market is seeing more and more companies listing in Russia’s capital instead of their traditional base in London, after a company under U.S. sanctions had a bad experience earlier this year, Bloomberg reports.
The trend, which was originally spurred by local trading reforms, started last year: meat producer Cherkizovo Group PJSC is mulling a Moscow share sale after it delisted from London in 2017, while the deputy chief executive officer of steel pipes producer TMK PJSC said he may consider a similar move in the future. The Moscow Exchange now handles 60 percent of the trading volume of dual-listed stocks compared with 44 percent in 2014.
The Russian companies’ flight home got fresh impetus this year after billionaire Oleg Deripaska’s En+ Group Plc was sanctioned just five months after a $1.5 billion listing in London and Moscow. Investors still holding the depository receipts are now trying to convert them into local shares where there is more liquidity, but the process is expensive and lengthy.
“It really doesn’t make sense for Russian companies to list abroad in the current environment,” said Ekaterina Iliouchenko, a money manager at Union Investment Privatfonds GmbH in Frankfurt. Fresh sanctions could lead to a foreign exchange blocking transactions, while “liquidity will drop dramatically as foreigners exit,” she said.
Anna Vasilenko, the Moscow Exchange’s managing director of client and corporate relations, says that before the bourse reformed its infrastructure in 2014, allowing foreigners to trade local shares more cheaply and easily, investment bankers would recommend companies to list abroad. Now those same firms are scheduling meetings to join the bourse.