Russian stocks plunge over Ukraine referendums and martial law fears
- The MOEX Russia Index saw its biggest retreat since the invasion began on February 24, while Russian equities were the world’s worst performers on Tuesday
- The Kremlin’s move to annex occupied regions in Ukraine means tensions are expected to remain high with no diplomatic solution in sight
Russian stocks slumped the most since the country invaded Ukraine in February as the Kremlin moved to annex the regions it still occupied following a sweeping Ukrainian counteroffensive.
The MOEX Russia Index tumbled as much as 11 per cent before paring the decline, trading down 8.8 per cent by the close in Moscow, the biggest retreat since February 24. Russian equities were the world’s worst performers on Tuesday.
The sell-off deepened as the so-called Donetsk and Luhansk People’s Republics, as well as the Kherson and Zaporizhzhia regions, announced they would hold their votes between September 23-27.
“Ukraine and the West are unlikely to recognise these votes and so tensions are likely to remain high with no diplomatic solution in sight,” said Win Thin, head of currency strategy at Brown Brothers Harriman & Co. in New York.
The moves add to the country’s mounting international isolation, after Turkish President Recep Tayyip Erdogan called on Russian leader Vladimir Putin to return occupied territory to Ukraine as part of a peace settlement.
With valuations already under pressure from months of international sanctions, the Russian market is being further weighed down by Europe’s intensifying efforts to reduce energy imports, as well as recent military setbacks in Ukraine.