U.S.-Sanctioned Russian Companies to Get Their Own Stock Exchange

Russia plans to create a special stock exchange where companies targeted by Western sanctions will have an opportunity to list their bonds, Krasnaya Vesna news agency reported.

Russia’s Deputy Finance Minister Alexey Moiseev said the launch was initially scheduled for December but was then postponed to January as the ministry needed more time to finish the platform.

At least two companies have said they are interested in trading 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 would not work the same way as a classic stock exchange, says Anton Bakhtin, investment strategist with Premier BCS. He told RT that the platform is set to work only in the ruble zone, attracting those willing to invest in 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 an international business – would be willing to risk being hit with secondary U.S. 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 U.S. sanctions regardless of the size of transactions,” the analyst said.