Published: 01 March 2022
Location: London, UK
Russia/Ukraine: The Moscow Stock Exchange was closed yesterday and remains closed today. Russia’s Central Bank said the decision to keep the exchange closed was “due to the emerging situation” and that it will issue an update by 06:00 GMT tomorrow. Moscow’s main stock market index fell by a third on Thursday in one of the worst wipe-outs in market history. In London yesterday, Russia-linked mining groups Polymetal and Evraz plunged by 55% and 26% respectively in late morning trading. The FTSE 100 ended the day 31.21 points and 0.42% down.
Nasdaq Inc. and the New York Stock Exchange have suspended trading for Russia-based companies listed on their exchanges.
The London Stock Exchange has stopped trade in two global depository receipts for Russian state-owned VTB Bank after they were suspended by the UK's financial regulator in response to sanctions over Ukraine. VTB, the second-largest majority Russian-state owned bank has assets totalling £154bn. British bank HSBC is expected to gradually end its relationships with various Russian banks, including VTB, according to Reuters. The UK government is expected to table legislation next week to ban major Russian companies from raising finance on UK markets and to prevent Moscow from raising sovereign debt in London.
The Russian rouble crashed more than 40% in trading yesterday in the wake of unprecedented international sanctions, plunging to an all-time low of just £0.0079. This morning it stands at £0.0082 and US $0.011.
Ukraine plans to issue war bonds to raise as much as $1.36bn (£1bn) from international bond investors to fund its armed forces in their battle against Russia. Auctions of war bonds in the local hryvinia currency will start today, with Ukraine looking to borrow money from investors for one year.
The price of crude oil has risen above $100 a barrel again because of the Russia/Ukraine conflict. Brent crude jumped 4.6% yesterday to hit $102, forcing a commensurate rise in petrol prices in the UK. The RAC said the average price of petrol jumped to £1.51 a litre on Sunday, while dieselincreased to £1.55, both record highs.
UK citizens have been advised by The Foreign Office not to travel to Russia due to a lack of flights available and economic problems in the country, citing reports of lots of people "attempting to withdraw their savings from Russian banks". Russia has now banned airlines from 36 countries in a tit-for-tat retaliation to sanctions. Russia had already banned UK airlines from flying to and across the region, and other nations including Germany, Spain, Italy and Canada have now been added to its list.
Deputy Prime Minister Dominic Raab has told the BBC Radio 4 Today Programme that the British and other governments have considered implementing a no-fly zone for Russian planes, but have ruled the idea out, saying such a move would put UK forces "in a position where they would be directly required to shoot down Russian planes". Raab did not rule out supplying Ukraine with fighter jets to defend itself against Russia.
International Russian Sanctions: The UK government, the EU and Florida Man Joe Biden’s administration have banned citizens and companies from doing business with the Bank of Russia, the Russian National Wealth Fund and the Ministry of Finance.
European Commission President Ursula von der Leyen has confirmed on Twitter that the EU will finance the purchase and delivery of weapons and equipment top Ukraine, to the tune of €450m (£376m), the first time the EU has supported “a country under attack” in this way. She also said EU airspace was now closed to Russian-owned, Russian registered or Russian-controlled aircraft, including the private jets of oligarchs. She also promised to “ban the Kremlin’s media machine in the EU” saying that “the state-owned Russia Today and Sputnik, and their subsidiaries, will no longer be able to spread their lies to justify Putin’s war.” “We are developing tools to ban their toxic and harmful disinformation in Europe,” she added.
Switzerland has also adopted the EU’s sanctions against Russia, in what is believed to be a first for the famously ‘neutral’ country. Monaco will also freeze assets & impose sanctions on Russians. Prince Albert said Monaco has “adopted & implemented without delay procedures for the freezing of funds & economic sanctions identical to those taken by most Euro States.” Canadian Prime Minister Justin Trudeau has announced a ban on Russian oil imports, although being the world’s fourth largest oil producer, Canada is not heavily reliant on Russian imports.
Two Chinese state-owned banks will restrict financing for Russian commodity purchases in a sign that cracks may be emerging between Beijing and Moscow as the Kremlin faces harsh international sanctions. Offshore units of Industrial & Commercial Bank of China have stopped issuing dollar-denominated letters of credit for Russian physical commodity exports, while Bank of China has also cut down on funding, Bloomberg reported. The Telegraph says Moscow and Beijing are frequently geopolitical partners against the US, and have formed increasing ties over recent years, with Russia a key supplier of energy to China. China’s biggest banks hold billions of assets in Russia and have provided tens of billions of dollars in credit to Russia as part of Beijing’s belt-and-road strategy.
Transport Secretary Grant Shapps has written to all UK ports asking them not to provide access to any Russian flagged, registered, owned, controlled, chartered or operated vessels. He Tweeted yesterday: “Given Putin's action in #Ukraine I've made clear these vessels are NOT welcome here with prohibiting legislation to follow.”
Sky News has learnt that abrdn, the FTSE-100 asset manager, is unable to sell its shareholding in the Rosneft, the Russian state oil giant previously backed by BP amid restrictions on foreign share trades on Moscow's stock exchange. City sources said abrdn had decided to sell its £5 million worth of Rosneft shares immediately after the Russian invasion of Ukraine. Abrdn publicly supported BP's decision, announced on Sunday, to sell its stake in Rosneft, which had been valued at about $14bn (£10.4bn) but is likely to be sold for far less than that - if it can be sold at all.
BP’s move to sever links with Kremlin-controlled Rosneft yesterday led to pressure on other oil majors to follow suit, and now FTSE 100 rival Shell has said it will divest from its Russian assets, which the company said were worth in the region of £3bn at the end of 2021. Shell will quit its 27.5% stake in Gazprom’s offshore gas project Sakhalin-2, which supplies about 4% of the global market for liquefied natural gas, and its 10% stake worth $1 billion in Gazprom’s Nord Stream, the 750-mile undersea pipeline that had been due to double the flow of natural gas from Russia to Germany before Berlin last week pulled the plug on the deal. Shell will also drop its 50% stake in the Salym Petroleum Development and the Gydan energy venture. CEO Ben van Beurden said: “We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security. Our decision to exit is one we take with conviction. We cannot – and we will not – stand by. Our immediate focus is the safety of our people in Ukraine and supporting our people in Russia. Business secretary Kwasi Kwarteng, who held talks with van Beurden yesterday, welcomed the news, saying: "Shell have made the right call to divest from Russia...there is now a strong moral imperative on British companies to isolate Russia. This invasion must be a strategic failure for Putin".
BP meanwhile is said to be seeking to sell its roughly 20% stake in Rosneftback to the state-controlled Russian explorer at a huge discount, according to people familiar with the matter, who have spoken to Bloomberg.
Corporate sanctions overview: Germany’s Daimler Truck is ending partnerships with Russian businesses and Volvo is halting deliveries of cars to the country. Warner Bros, Disney and Sony have halted the release of films in Russian cinemas, after the invasion of Ukraine. The announcements mean the releases of major movies The Batman, Turning Red and Morbius will now not go ahead as scheduled in the country. The Comparethemarket price comparison site has pulled ads featuring the animated rich Russian meerkat Aleksandr Orlov, having reviewed its media strategy due to sensitivities around the Russian invasion. British events organiser Hyve Group is postponing events in Ukraine until further notice. Although income from such events represents less than 3% of the Group's revenue, shares in the London-listed company plunged more than 23% yesterday. Dell Technologies confirmed to Yahoo Finance that it has suspended product sales in Ukraine and Russia. Facebook parent Meta has barred ads from Russian state media on its website, and Twitter has suspended all adverts in Russia and Ukraine. Alphabet Inc.’s Google has banned Russia's state-owned media outlet RTand other channels from collecting money for ads on their websites, apps, and YouTube videos. Delta Airlines has halted its alliance with Russia’s flagship airline Aeroflot. Transport giants FedEx and UPS have suspended shipments into Russia. Intel and AMD have suspended microchip shipments into Russia.
JPMorgan is predicting Russia will fall into recession because of Western sanctions after its invasion of Ukraine. "We tentatively assume that Russia’s economy will contract 20% quarter over quarter, saar [seasonal adjusted annualized rate], in 2Q, and for the year around 3.5%. But the margin of error for any such guesstimate is incredibly high at this point, and risks are skewed heavily to the downside. Moreover, we believe Russia’s growing political and economic isolation will curtail Russia’s growth potential in years to come and lower Russia’s trend growth to 1.0%, down from 1.75% previously," JPMorgan strategists warned in a new note on Monday. The bank added the Russia economy will likely enter recession.
Bitcoin passed the $40,000 (£29,848) threshold yesterday after major cryptocurrency platforms Binance and Kraken refused to ban Russian users despite pleas from Ukraine. Kraken co-founder and CEO Jesse Powell said the platform could not "freeze" Russian clients "without a legal requirement" to do so. "It goes without saying the defining characteristics of bitcoin allows it to act as a safe haven during turbulent times," Paolo Ardoino, CTO of BitFinex,told Yahoo Finance.
Britain has signed a comprehensive free trade deal with New Zealand (NZ) that the Department for International Trade (DIT) says will remove trade barriers on a huge range of UK goods and services and provide new opportunities for British businesses. Under the tariffs will be eliminated on all UK exports to New Zealand, including current tariffs of up to 10% on clothing and footwear, 5% on buses and up to 5% on ships, bulldozers and excavators. The DIT says Britain’s 5,900 smaller businesses which export good to NZ will also find it easier to break into the New Zealand market as a result of modernised customs procedures, such as digital documents and customs clearance as quick as six hours. Trade Secretary Anne-Marie Trevelyantweeted that the deal slashes red tape for British businesses exporting to NZ and boosts the economy by £800m in the long run. Conservative Party Chairman Oliver Dowden tweeted that the move boosts trade between the two countries by almost 60% and that it was “all possible thanks to the new Brexit freedoms we now enjoy”.
The highest train fare rises for nine years have come into force for rail travellers in England and Wales: regulated fares – which cover around half of all fares and include season tickets on most commuter routes - will rise by up to 3.8%. The Labour party condemned what it called a "brutal" rise while the TUC union said it would "make it harder for city centres to bounce back" from Covid. The government said the increase was below the rate of inflation, as it is based on last July’s RPI. The current RPI is 7.8%. Usually, train fare increases follow the formula of RPI plus 1%. Nevertheless, Tuesday's rise is the steepest increase since January 2013, according to figures from industry body the Rail Delivery Group.
Barclays bank has been fined £783,800 by the Financial Conduct Authority(FCA) for oversight failings in its relationship with collapsed payments firm Premier FX. The FCA said the bank had failed to make enquiries to ensure that Premier FX's actual business activity aligned with its expectations and did not identify that Premier FX's internal controls were deficient. The regulator said the fine takes into consideration that Barclays had voluntarily agreed to cover the losses of Premier FX customers, whose claims have been accepted by Premier FX’s liquidators. All 167 customers of Premier FX with accepted claims will therefore have 100% of their money returned.
British food manufacturer Pukka Pies is set to invest £5.1 million expanding production capacity at its bakery in Syston, Leicestershire. The family-owned firm typically bakes around 180,000 pies, sausage rolls and pastries every day.
Brompton, Britain's biggest bicycle manufacturer, is set to build a new £100 million factory and global HQ in Ashford, Kent. The huge investment will more than double the firm's production capacity and create hundreds of jobs.
Globally, listed companies paid shareholders $1.47tn (£1tn) in dividendslast year, the highest total ever recorded. International dividends surged 14.7%, with records broken in a number of countries, including the US, Brazil, China and Sweden. Banks and miners delivered three-fifths of the $212bn increase in payouts: banks saw dividends jump by 40% — or $50.5bn — driven by restoring payouts to more normal levels after regulators curbed distributions in many parts of the world in 2020. More than one quarter of the annual dividend increase came from miners, which benefited from soaring commodity prices.
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