What’s Happening In The Russian Stock Market During The War In Ukraine? (2022)

Key takeaways

  • The Russian stock market tanked after Russia’s invasion of Ukraine. It has seen its largest subsequent dip after Ukraine successfully went on the offensive, driving Putin to instate an unpopular draft of Russian soldiers.
  • Divestments in the Russian economy and sanctions by Western countries have impeded the Russian stock market throughout the crisis.
  • Even when Russian gas and oil companies have seen minor successes, these have not been enough to bring the MOEX Russia Index up to pre-invasion levels.

The Russian stock market has not fared well since the invasion of Ukraine. While this downward tumble was entirely predictable, it may be a sacrifice Putin is willing to endure in order to reach his long-term goals.

MOEX tanks leading up to invasion of Ukraine

Between Feb. 14 - 23, 2022, Russia started bulking up its forces along the Ukrainian border. That week, U.S. President Biden issued an executive order halting imports, exports and investments between the U.S. and Russia. That same week, the European Union placed sanctions and travel bans on five Russian individuals.

Western treasuries took action too. On Feb. 22, 2022, the U.S. and United Kingdom placed sanctions and froze assets of major Russian banks. That same day, Germany backed out of an $11 billion deal to build a pipeline between Russia and Germany.

On February 23, the EU took further measures to ban Russian imports from certain regions and prohibited certain European exports to Russia. It also placed restrictions on trades, investments and Russian access to EU financial markets. Further sanctions on Russian individuals were also put into place.

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The same day, Australia created restrictions disallowing its citizens from interacting with Russian banks. It also placed sanctions and travel bans on several Russian individuals. Japan followed suit with travel, trade and banking restrictions on February 24 – the day of the official invasion.

The MOEX Russia Index fell most dramatically in the lead up to the actual invasion, as Putin was lining up troops along the border. From February 16 - 24, the index took its most dramatic nose dive from 3,683.95 down to 2,058.12. It hasn’t gone back above 2,787.69 since.

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The ensuing week saw further sanctions from Western nations. These sanctions blocked trade, perhaps most importantly with Russia’s oil and gas exports. Investments were frozen. Airspace was closed.

Russia’s actions even merited a plea from its ally India to help Indian nationals evacuate the region safely – although President Modi would not go so far as to condemn Putin’s actions.

A slight uptick amid peace talks before falling again

In late March, there were talks of potential ceasefire agreements brokered between the two nations in Istanbul. The MOEX rose to its highest point since the invasion began as nations tentatively hoped they could negotiate a meaningful peace agreement.

But no such thing happened. While Ukraine offered neutrality in exchange for extended talks over Crimea, Russia balked at any type of ceasefire. Instead, it only agreed to scale down military operations — a hollow promise.

The MOEX started tumbling again with revelations of war crimes committed by the Russian military on April 4, 2022. New and ever-increasing sanctions have been imposed on Russia from this point forward.

Marginal end-of-summer rally with announcement of dividend payments

The MOEX continued to bumble along throughout the summer as Russia continued its attacks and faced further sanctions. The Ukrainian people held off these attacks more powerfully than anyone could have predicted, though they still sustained great losses, making it clear that absolutely no one was actually winning the war.

In late August, Russian oil company Lukoil started performing better, as did gas giant Gazprom with an announcement that it would start paying out dividends to its investors. This helped the MOEX rally a bit all the way up to 2,488.44 on Sept. 5, 2022, though not nearly to its March 2022 post-invasion high of 2,787.69.

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The MOEX reaches new lows with Ukrainian offensive

Ukrainian President Volodymyr Zelensky knew that winter was coming, and that if his people had a chance of sustaining themselves through the colder months, they’d need to log a major win in order to secure further military and financial support from allies abroad. Individual investors are also looking to support Ukraine.

This was doubly important not only because he needed to sustain his own people and continue asserting his country’s sovereignty, but also because sanctions on Russian gas would be much less politically popular for EU leaders in the winter months compared to how they have been received over the summer.

So in early September, he leveraged recent aid packages received from the U.S. and EU countries to launch the first major offensive strike by Ukrainian forces. By almost all accounts, he was successful. The strike led to a reported collapse of the Russian northeastern front in the Kharkiv region.

Russia has sustained serious losses, which sparked Putin to instate a draft of 300,000 men with “specialized military experience.” All Russian men are technically required to fulfill military service at a young age, which means most of them have a history with the military. Some get out of it through medical excuses or bribery.

Even those with no military service are currently being conscripted, despite Putin’s initial insistence that only those with relevant military history would be called to serve.

The move has sparked protests and a mass exodus from the region. One Russian man lit himself on fire, another shot a military recruiter and many have fled to neutral Turkey.

In the days that followed the Russian retreat and ensuing draft, the MOEX has fallen even further, past its previous February low down to 1,993.35 as of Sept. 27, 2022.

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Putin’s long game

To understand why Putin is willingly putting his country’s economic well-being through this chaos, one needs to understand his history and intended legacy.

Putin was a young KGB officer when the Berlin Wall fell and the USSR dissolved. He has since expressed that this event was a national humiliation, and has worked in the time since to reframe Russian history as a source of pride.

Actions he has taken as President, such as the annexation of Crimea, have been described as an extension of his effort to correct what appears to have been a traumatic experience for Putin in Germany all those years ago. It is reasonable to view this latest push as an attempt to establish his legacy as the man who restores Russia to its former glory under a new hierarchy.

While Russia has violently annexed other regions throughout the years, including Chechnya in the 1990s, Putin started this most recent push in 2014 with disinformation campaigns in Crimea, annexing the region with surprisingly little resistance from the West. He then used similar disinformation campaigns to create political chaos in countries like the United States.

He views his opposition as weakened and is using this moment to try to seize back the breadbasket of Europe – Ukraine. If he can reestablish dominance over the region, it could be of long-term benefit to Russia’s economy and open the door to seize other sovereign nations to bring them back under Russian rule.

Ukraine is fighting back valiantly, though, and with continued support from its Western allies, they could thwart Putin’s plans entirely. Whether or not Putin’s gamble with his own country’s financial well-being pays off remains to be seen.

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FAQs

What effect will war in Ukraine have on stock market? ›

The war in Ukraine has been mentioned as a factor in about 250 S&P Global credit rating downgrades or outlook cuts since it began in late February. The increase in energy costs and interest rates globally means the impact is likely to spread.

What would war with Russia do to the stock market? ›

“A Russian defeat would likely see energy prices fall, inflation head lower, interest rate hike expectations get ratcheted down, and the euro and the yen bounce back. And equity markets everywhere would rip higher,” Gave writes. That's the most optimistic outcome. It's also one that may be the least likely.

How is the war between Russia and Ukraine affecting the stock market? ›

US stocks rose during the early days of the war and though markets have turned volatile since the Russian military entered Ukraine, that volatility more reflects uncertainty about US monetary policy rather than Russian military policy.

Should I pull my money out of the stock market? ›

Although the stock market produces volatile returns, it has a long history of outpacing inflation in the long run. So, if the money you have invested in the stock market isn't going to be used in the next few years, it's likely safer to keep your money invested than to take it out.

What happens to the stock market if we go to war? ›

In general, defense stocks (companies that produce weapons and armaments) tend to fare the best during a wartime environment. Energy companies may also see a boost in conflicts that result in higher oil and commodity prices.

What happens if you have Russian stocks? ›

Owned Stocks

If you have Russian equities — stocks — in your portfolio now, you can only sell these positions to investors outside the U.S., based on an executive order issued by President Biden in June.

Should I invest in stocks during war? ›

Stocks will stay resilient amid the war.

Steiner said past precedent shows stocks can maintain value during major conflicts. “If we take a historical view looking at the geopolitical lens, most portfolios heavily weighted in equities tend to be pretty resilient.”

Is Russia stock market still shutting down? ›

Russia's stock index reopens and rises with government intervention. The market opened for the first time since Feb. 25, and the MOEX index was probably pushed up by measures designed to avoid a sell-off.

Which Stocks Profit from Ukraine war? ›

A basket of five— Northrop Grumman (ticker: NOC), Lockheed Martin (LMT), General Dynamics (GD), L3Harris Technologies (LHX), and Leidos Holdings (LDOS)—have gained 5.8% in 2022, far better than the S&P 500 index's 24% drop.

Should a 70 year old be in the stock market? ›

What should a 70-year-old invest in? The average 70-year-old would most likely benefit from investing in Treasury securities, dividend-paying stocks, and annuities. All of these options offer relatively low risk.

Will the stock market bounce back in 2022? ›

Economic uncertainty may have peaked in the first half of 2022, but it remains high. Stocks are likely to continue to feel the weight of Federal Reserve policy tightening, shrinking market liquidity and slower economic growth.

How much cash should I keep out of the market? ›

Most financial experts end up suggesting you need a cash stash equal to six months of expenses: If you need $5,000 to survive every month, save $30,000.

Which stocks will benefit from war? ›

War Stocks to Buy Now According to Hedge Funds
  • Intrepid Potash, Inc. (NYSE:IPI)
  • Lithium Americas Corp. (NYSE:LAC)
  • Northrop Grumman Corporation (NYSE:NOC)
  • Nutrien Ltd. (NYSE:NTR)
  • Lockheed Martin Corporation (NYSE:LMT)
7 Mar 2022

Does the stock market go up or down during war? ›

Yes, during the pre-war phase, stock prices decline due to uncertainty, but once war begins, the stock market goes up. Most of the pre-war volatility subsides, and investors enjoy relative stability.

Do stocks drop before war? ›

That isn't to say that there aren't classes of investments or sectors that don't suffer during armed conflicts. An increased likelihood of armed conflict tends to decrease stock prices - but even more so when the armed conflict is a "surprise".

Is it safe to invest in Russian stocks? ›

Can I Still Buy Russian Stocks? No. On June 6, 2022, the Biden administration issued an executive order prohibiting investors in the U.S. from purchasing new or existing bonds or stocks securities issued by any entity in the Russian Federation. Investors may, but are not required to, sell their Russian positions.

Are Russian stocks trading again? ›

Russia is slowly reopening its equity trading after suspending it from Feb. 28 until yesterday after the nation was hit with unprecedented sanctions, spanning everything from its ability to access foreign reserves to the SWIFT bank-messaging system.

Is it good time to invest in Russian stock market? ›

Financial Breakdown

Russian stock markets already collapsed by two-third since their peak in October 2021 before the sanctions and have been closed since then. It had a market cap of over $550 billion at peak and now the Russian stock market has been excluded from the regional indices and has become un-investible.

What happens to your money in the bank if war breaks out? ›

Your money is safe inside a bank. Bank deposits are insured by the FDIC and are protected up to at least $250,000. The best place for your emergency fund is a money market account or savings account. If you want to keep some cash at home, that's fine, but I don't recommend cashing out your savings.”

What can I buy during war? ›

Commodities to Buy During War
  • Digital Gold. Gold, being a precious metal, has always held a special place in the hearts of people around the world. ...
  • Digital Silver: Commodities to Buy During War. ...
  • Blue-Chip War Stocks: Commodities to Buy During War. ...
  • Commodity-based ETFs: Commodities to Buy During War. ...
  • Daily Commodities.
4 Apr 2022

Has the Russian stock market collapsed? ›

The collapse of the Russian stock market following the invasion of Ukraine has left the majority of Russia ETFs in an "unprecedented" position after the majority of exchanges across Europe suspended trading.

Why are Russian stocks suspended? ›

Russia's move to halt stock trading came as the country's economy was squeezed. Russia's central bank raised its key interest rate to the highest level in two decades, rubles–-–the local currency–-–plunged to a record low, and the MOEX Russia Index for Russian stocks slid 28% last week.

How much has the Russian stock market dropped? ›

Russian Stocks' 33% Crash Is Fifth-Worst Plunge in Market History - Bloomberg.

What should I invest in for Russia Ukraine war? ›

Energy stocks

One sector that is worthy of particular examination during the current crisis is energy, because of the sharp increase in oil prices and sanctions on Russian gas.

Is the stock market down because of the war in Ukraine? ›

NEW YORK (AP) — Stocks gave up early gains and closed broadly lower Friday, capping a turbulent week of trading on Wall Street as uncertainty about the war in Ukraine and surging inflation continue to roil markets. The S&P 500 fell 1.3% after having been up 0.7% in the early going.

Will the Ukraine invasion hurt stocks? ›

Russia's invasion of Ukraine is sending shockwaves through pretty much every asset class across the globe. Risk assets such as stocks are tumbling. Traditional safe havens like Treasury debt and gold are rising. And oil and other key commodities are spiking at a time when U.S. inflation just hit a four-decade high.

Will the stock market crash if Russia invades Ukraine? ›

The highly unpredictable nature of Russia's threat against Ukraine has rippled across financial markets without much impact on stocks. But if Russia were to move its troops across the border, it could cause a major risk-off event — sending equities lower and commodity prices even higher.

Which stocks Profit from Ukraine war? ›

A basket of five— Northrop Grumman (ticker: NOC), Lockheed Martin (LMT), General Dynamics (GD), L3Harris Technologies (LHX), and Leidos Holdings (LDOS)—have gained 5.8% in 2022, far better than the S&P 500 index's 24% drop.

What will the stock market do in 2022? ›

Economic uncertainty may have peaked in the first half of 2022, but it remains high. Stocks are likely to continue to feel the weight of Federal Reserve policy tightening, shrinking market liquidity and slower economic growth.

Which stocks affected by Russia Ukraine War? ›

8 stocks affected by the Russia-Ukraine war:
  • EPAM Systems Inc. (EPAM)
  • Expedia Group Inc. (EXPE)
  • CF Industries Holdings Inc. (CF)
  • Valero Energy Corp. (VLO)
  • Northrop Grumman Corp. (NOC)
  • Equinor ASA (EQNR)
  • PVH Corp. (PVH)
  • Carnival Corp. (CCL)
24 May 2022

Is the stock market collapsing? ›

The U.S. stock market has been crashing all year long. In fact, year-to-date, the S&P 500 is down 23.3% through its first 184 trading days of the year. That makes 2022 the fourth-worst year in the stock market's history.

Should I invest in stock? ›

For most people, the time to buy stocks is right now

People who have money they won't need for a few years should consider investing in stocks since it has the potential of earning the highest returns. Waiting to invest that money is more likely to have a negative impact on an investor's returns than a positive one.

Are stocks crashing because of Russia? ›

Stocks are falling amid tensions between Russia and Ukraine. Experts say stay the course. U.S. stocks are slipping as investors watch tensions between Russia and Ukraine rise. All major indexes have posted losses in recent days as traders weigh how the situation will impact the global economy.

How do I protect my portfolio if Russia invades Ukraine? ›

Ways to protect your portfolio

Some of the safe havens in times of conflict include: Cash (U.S dollar, Japanese Yen, Swiss Franc). U.S Government bonds. Physical Gold, and quality gold producing mining companies.

Videos

1. Russia, Ukraine and stocks: How the intensifying economic war against Russia could affect markets
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2. Threat of possible Russian invasion of Ukraine causing stock market dips
(CBS News)
3. Financial market impact of Russia-Ukraine conflict
(DBS)
4. Stock markets adjusting to volatility of war in Ukraine
(CBS News)
5. Russia-Ukraine Crisis’ Impact On Stock Market, Oil Prices & Gold Demand; What Should Investors Do?
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6. What Is the Impact of the Russia-Ukraine War on Grain Markets?
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