Moscow Urges Russian Companies To Delist From Overseas Stock Exchanges

Russian companies listed on foreign stock exchanges should consider delisting their shares overseas and trade in Moscow instead, First Deputy Prime Minister Igor Shuvalov was quoted as saying on Tuesday, claiming that the Moscow Exchange provided additional security amid foreign sanctions on Russian entities over Crimea.

“This is a question of economic security,” Shuvalov told reporters after a government meeting near Moscow.

Russian companies listed on foreign stock exchanges should consider delisting their shares overseas and trade in Moscow instead, First Deputy Prime Minister Igor Shuvalov was quoted as saying on Tuesday, claiming that the Moscow Exchange provided additional security amid foreign sanctions on Russian entities over Crimea.

“This is a question of economic security,” Shuvalov told reporters after a government meeting near Moscow.

“Now all issuers need to approach this issue seriously, even those which are not connected with the privatisation process, even those which have gone through the process of listing and issuance on the New York exchange, London and other exchanges.”

“They need to consider the possibility of re-registering on the Moscow Exchange,” he said, as cited by Reuters.

The U.S. and Europe have threatening to step up economic sanctions against Russia following President Vladimir Putin’s move to annex Crimea from Ukraine last month. In the immediate week after the standoff, a Bloomberg report claimed that Russian billionaires had lost close to $13 billion in wealth due to stocks plummeting.

Simultaneously, since last year, President Putin has been urging Russian companies to privatise on the local exchange, instead of the previous practice when major state companies were floated on the London Stock Exchange.

The president has also been pushing for so-called “deoffshorisation” of the Russian economy, whereby companies with offshore entities re-register them in Russia and pay taxes in Russia.

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But some analysts expressed doubt that a return to Moscow would be beneficial to Russian companies.

With foreign investors holding 70 percent of Russia’s stock free-float, a move away from Western markets would stoke a “further selloff,” according to Elena Loven, who helps manage more than 1 billion euros ($1.4 billion) in Russian stocks at Swedbank Robur in Stockholm.

[quote]“You are just moving away from your ‘natural’ investor base,” Loven told Bloomberg. “So I can’t see anything positive in that for the broader equity market.”[/quote]

“The question is whether listed companies will have enough liquidity on the Moscow Exchange and new ones will be able to raise money at good cost levels,” added Jack Arnoff, a partner at Elbrus Capital Partners in London. “Russia needs to make further progress on shareholder rights in order to attract business to the local exchange, this is the main issue.”