Rusal Removed from Share and Debt Indexes as Aluminium Prices Rise

Shares, bonds and metal of Russian aluminium giant Rusal were top sellers on Wednesday as international financial groups took action to distance themselves from the company after it became a target for United States-imposed sanctions, Reuters reported.

The Russian government pledged to provide Rusal with short-term liquidity and offer other assistance while it also considered hitting back by looking at US goods or goods produced in Russia by U.S. companies.

UC Rusal’s shares will be deleted from global equity and debt indexes while its metal will not be allowed on the London Metal Exchange (LME) and the CME Group.

The U.S. Treasury on April 6 announced sanctions against seven Russian oligarchs and 12 companies they own or control, saying they were profiting from a Russian state engaged in “malign activities” around the world.

This included Oleg Deripaska and his Hong Kong-listed company Rusal and his newly created holding company En+ Group. The two companies will be deleted from FTSE Russell’s equity indexes effective from the open on April 13, the index provider said in a statement.

Rusal’s shares in Hong Kong have slumped by half since the sanctions were imposed on Friday and gave up another 1.9% yesterday.

Meanwhile, Aluminum was heading for its biggest winning streak since 1988 in the four days since the U.S. slapped sanctions on Rusal. The metal advanced 3% on Wednesday to $2,266.50 a ton by 11 am on the London Metal Exchange (LME). That’s up 13% since Thursday, before the U.S. announced sanctions.

The new sanctions were an attempt to capture global markets for U.S. companies, Prime Minister Dmitry Medvedev told Russia’s lower house of parliament.

“Measures in response should be well thought-out,” he said.” There are quite a lot of products…in our markets that we get from the USA.”

Russia imported $12.5bn worth of U.S. products in 2017, according to official Russian customs data.

That included aircraft, machinery, pharmaceutical and chemical products. On the debt front, Rusal will be excluded on April 30 from JPMorgan’s CEMBI index group of emerging market corporate bonds, the U.S. bank said. The exclusion will be done as part of the end-of-month rebalancing of the indexes, it added.