US calls Russia’s stock exchange Potemkin market as trade resumes

Russia’s stock exchange opened for the first
time in a month on Thursday as investors took part in a highly restricted
trading session. The benchmark MOEX index gained as much as 10% in early trade
in Moscow. Russia’s central bank has banned short sales, and foreign investors
are not allowed to dump shares, prohibitions that could help support stocks.

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The White House said Russia’s reopening of
its stock market amounts to a “Potemkin market opening” that will
obscure the dire effects of Western economic sanctions.

The term “Potemkin Village” is
derived from a story dating back to 18th-century Russia, suggesting that an
artificial place can be built to disguise or conceal the true identity of the
original.

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‘Not a real market’

White House’s deputy national security
adviser Daleep Singh said it was “not a real market and not a sustainable
model — which only underscores Russia’s isolation from the global financial
system.”

“What we’re seeing is a charade,”
Singh added.

“After keeping its markets closed for
nearly a month, Russia announced it will only allow 15% of listed shares to
trade, foreigners are prohibited from selling their shares, and short selling
in general has been banned. Meanwhile, Russia has made clear they are going to
pour government resources into artificially propping up the shares of companies
that are trading.”

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What is reopening in Russia’s stock
exchange?

*The Moscow Stock Exchange will partially
re-open for trading in Russian stocks on Thursday, Russia’s Central Bank
announced.

*The Bank of Russia said trading in 33
stocks will resume between 9.50 a.m. and 2 p.m. local time.

*The Russian equities allowed to resume
trading include big companies such as Gazprom, Lukoil, VTB Bank, Sberbank,
Rusal and Rosneft.

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The central bank said there will be a ban
applied on short shelling for these shares.

Investors are able to trade 33 stocks
during the limited session from 9:50 am to 2:00 pm in Moscow. Blue-chip stocks
Gazprom, Lukoil, VTB Bank, Sberbank, Rusal and Rosneft are among the equities
that are trading.

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Russian stocks last traded on February 25
after President Vladimir Putin’s invasion of Ukraine caused shares to plummet.
The MOEX index had lost roughly 35% of its value this year, while the RTS index
— which is denominated in dollars — had plunged 42%.