"Toxic Assets": Ruble Crashes, Russian Stocks Plunge Most In 4 Years After US Sanctions

Last Friday's sanctions imposed by the US on Putin-allied Russian oligarchs and billionaires - including aluminum magnate Oleg Deripaska - as well as associated companies, have had an adverse impact on both the Russian currency and local equities, with the ruble crashing 2.3% to a fresh YTD low of 60 to the USD, the biggest drop since November 2016 and bringing the 3-day drop to 3.5%...

... while Russian stocks as tracked by the benchmark MOEX Russia Index dropped as much as 7.2%, the biggest one day drop since March 2014, when the Russia-Ukraine proxy war spiraled out of control following the Russian anex of Crimea in response to the CIA-backed presidential coup in Ukraine.

VTB Bank slumped as much as 12% after its Chairman Andrey Kostin was included in the U.S. sanctions list; Polyus declined as much as 15% after Suleiman Kerimov, whose son controls Polyus, was also sanctioned.

At the same time, Russian CDS climbed 17 bps, or 14%, set for the biggest jump since December 2014, while Russian ruble bonds maturing September 2031 fell for a second day, lifting the yield 18 bps to 7.39%, the highest since February, and the biggest one day drop since November 2016.

"We haven’t seen such a united, mass retreat from Russian assets for a long time," Kirill Tremasov, director of the analysis department at Loko-Invest said by phone. “The situation is ever more reminiscent of 2014.”

The reason for the panicked scramble out of Russian assets is due to investor concerns penalties against Russia for "meddling in the 2016 election" while led the US Treasury to sanction dozens of Russian tycoons, key allies of President Vladimir Putin, and 15 companies some of which publicly traded, would led to a liquidity and/or solvency shock for Russian corporations. While the Friday news came in just before US payrolls, and at the time there was a modest reaction in markets, there now seems to have been a belated, and nasty reaction.

Additionally, over the weekend, Donald Trump warned of a "big price to pay" in response to reports of a chemical attack outside Syria’s capital, saying President Vladimir Putin and Iran “are responsible for backing Animal Assad.”

The fallout from the sanctions will not be short lived, according to Citi. After all, Russia Prime Minister Medvedev has ordered the government to take steps to help sanctioned companies, as well as noting that Russia has the right to respond to the US sanctions. Any retaliation may signal a deterioration of US-Russia relations, depending on what action Russia decides to take in response. This comes amid an attack on a Syrian airbase, which the Russia defense ministry says was Israel that fired it. This countered speculation that it may have been the US, after Trump tweeted that there is a "big price to pay" for the reported chemical attack at the weekend.

As Citi adds, market participants are understandably taking out positioning in RUB assets in such an environment: "Our eTrading desk notes that interbank trading volumes are nearly three times the 30d average. However a number of stop runs seem to have been accelerated this move. This is the biggest one day move we have seen in a while. USDRUB seems hesitant to test the 60 handle, although the pair is up almost 3% on the day. The November 2017 high comes to mind at 60.45 and then, the June 2017 high at 60.99."

But the big action was on the Russian stock market, where shares plunged in billionaire Oleg Deripaska’s aluminum giant Rusal and Viktor Vekselberg’s energy holding En+.

Of note: Rusal asked its customers to stop payments after it was placed under U.S. sanctions. The world's second largest aluminum company by production output was investigating the consequences of the sanctions and doesn’t waive its right to the payments, according to a copy of a letter dated April 6 and signed by Rusal’s head of marketing, Bloomberg reported. "We request that you immediately withhold all payments and remittances to UC Rusal until further notice,” the company said in the letter. "We are working intensively to ensure continuty of our business."

Rusal shares fell 50% to HK$2.32 on Monday, according to pricing from the Hong Kong Exchanges & Clearing . website, amid fears the company will file for bankruptcy having been isolated from global funding. Shares dropped about 47% in Moscow before recovering about half the drop.

“Investors finally realized how badly things are turning out for Russia,” said Vadim Bit-Avragim, a money manager at Kapital Asset Management LLC in Moscow, who’s selling Russian shares today. “It seems like the U.S. has had enough. Foreign investors have to exit sanctioned companies, but they saw this order as a signal to exit all Russian stocks. Investors are afraid that now any Russian company is at risk of sanctions. Traders are closing limits on Russian shares because they’re seen as toxic assets."

A question many investors are asking on Monday morning is whether China will step up and provide "last-resort" liquidity as Russia once again finds itself isolated from Western funding source.

Comments

JRobby Haus-Targaryen Mon, 04/09/2018 - 08:08 Permalink

Seems like every other week WW III is on, then it's off, then it's on, then.......

Not thinking there is a real strategy here. More like a tug of war within the factions of empire.

The only question one can ask is: what can I do today to destroy evil?

In reply to by Haus-Targaryen

Adolph.H. JRobby Mon, 04/09/2018 - 08:15 Permalink

It's already too late because Russian economy is working in war mode full throttle. 

And Jews are destroying their central bank and free market scam by using it too openly. This is good for humanity to get withdrawn from this "system"...

All wars are bankers' wars.

 

----

It's okay not to be a negro.

In reply to by JRobby

Latina Lover egerman Mon, 04/09/2018 - 08:41 Permalink

Russia has a much better physical economy with  debt of only 17% of GDP, versus the  the USSA, with over 21 Trillion in Debt. The USSA needs to steal russian resources to prop up their failing economic manipulations.

BTW, if you think the sanctions were a co incidence, just prior to the Syrian false flag, think again.  The drop in the Ruble was clearly orchestrated by the western banksters.

 

In reply to by egerman

bshirley1968 egerman Mon, 04/09/2018 - 09:40 Permalink

Since you are implying that you have, you could tell us what we are missing.

These "trumped"-up charges of election meddling and chemical weapons usage are desperate acts by a desperate power trying to maintain its influence on the world stage. Throw in this bullshit "trade war" with China, and it is clear to see that the US is in scramble mode to keep the herd fenced in. China has now eliminated the biggest reason to have dollars with their oil futures market. Russia, Iran, and Venezuela have plenty of energy to sell to those that would be boycotted by the "friends" of the US. China has any manufacturing a country might need. China and South Africa have precious metals, minerals, and rare earth minerals. Brazil and Russia grow a huge amount of base food like wheat and soybeans. Russia and China have a currency system that frees them from SWIFT.
The point I'm making is that the world needs the US less and less. That need is how we have maintained power. People get tired of "needing" you when you start creating reasons and applying force to keep them needing you. The rest of the world is tired of the greedy bastards here in the US, hell, I'm tired of them as well. All they ever want is MOAR!

In reply to by egerman

bitzager egerman Mon, 04/09/2018 - 11:09 Permalink

Typical fresh brainless immigrant... Just wait and see what the western "capitalism" will have for you... Speaking about corruption, are you saying no corruption in US or in Germany where you sitting now? Simply it's on much higher level and scale.. Western Gents stealing by trillions and all lawfully, cause they are the LAW..

And by the way, f*ck you for shitting on your homeland, - typical Ukrainian/jew, keep licking that ass...

In reply to by egerman

MoralsAreEssential egerman Mon, 04/09/2018 - 17:13 Permalink

My understanding is Putin nationalized the Russian Bank and kicked out or disenfranchised Rothschilds.  Also, that he won at 13 level chess with the Chabbad/Zionist Jews who owned everything after the SU fell by making laws establishing boundaries on what was going to aid Mother Russia and her population to have some quality of life and a working economy neither "owned" by criminals nor Western corporations.  I can understand if you have anger at SU, Zios and communists, but Putin is not part of that seemingly.  Yeltsin sold your country out to Western interests.  The US is also sold out to Zionist interests.  Both Trump and Putin are trying to resurrect their respective countries from Robber Barons.

In reply to by egerman

gdpetti bshirley1968 Mon, 04/09/2018 - 09:54 Permalink

True, but remember empires end in war... and the NWO doesn't need its OWO, which is being exposed and dumped, same as will happen with its various markets. Russian ruble going down... means less imports, right? Which helps domestic industry/ag etc? Which is good for a country prepping for war, which is obviously being pushed by the usual suspects, all of whom are expendable, and who see the people of their own countries as expendable... circular logic, or none at all, it's how these pathologicals think... such as in the land now called Israel... almost half of whom are psychopaths... so, is it any wonder that the 'smart' ones choose not to live there?

China is still in empire building mode, making up for lost time... which it can never get back, seeing how Mother Nature is about to swing in and clean house... a cyclical thing... but this time is one of the major cleanups.. those that only the geologists talk about... 6th extinction it's being called this time.

All the other BS is typical empire crap... same script everytime, which in our internet age, has reached a point of exposing itself too much, so war is inevitable to wash it away, along with itself, like any host that attacks and kills its host... and itself along with it... long term thinking it does not do... OWO... soon to be a thing of the past.. like most of the herd. Syria is a good testing ground, same as Spain before WW2.

In reply to by bshirley1968

veritas semper… richsob Mon, 04/09/2018 - 11:32 Permalink

No . They are not.

The Russian see the West and especially America as a depraved ,dying empire. Russia has completely turned her back toward the West.

See this : The Russian view is simple: the West is ruled by a gang of thugs supported by an infinitely lying and hypocritical media while the general public in the West has been hopelessly zombified.  The authority of the so-called “western values” (democracy, rule of law, human rights, etc.) in Russia is now roadkill.

This is very ,very important and significant . Read the article.

http://thesaker.is/listening-to-russian-experts-short-report-about-the-…

In reply to by richsob

veritas semper… Sandmann Mon, 04/09/2018 - 11:40 Permalink

It's amazing to me how so many Americans think that paper is "wealth" ,that having three screen TV ,6 cars ,a big house , 5 Iphones  ALL on debit ( meaning those are not actually theirs 'til are  payed off) make them "rich" .

Americans have > 1 Trillion $ debt only on credit cards ; never mind student debt , other personal debt , like mortgages , cars ,etc.  Then there is the Federal debt ,the corporations debt ,the unfunded liabilities ...

ALL this "wealth" that America has is indeed great ,I would say overwhelming .

In reply to by Sandmann

crazzziecanuck DingleBarryObummer Mon, 04/09/2018 - 09:10 Permalink

What Qaddaffi and Hussein both proposed to do were quite different.

Hussein threatened to deal only in Euros for oil.  What Hussein proposed could easily be shrugged off as it was isolated, and that's not the reason why Iraq was invaded.  Everyone knew Iraq painted a bull's eye on itself, saw the inevitable, and therefore, no one would dare attempt the same.  That made it an isolated event.  But the real reason why Iraq was invaded  was because it was a weak, destroyed country that the USA could actually fight and win against.  The invasion of Iraq was an illustration of American weakness and hubris of the leadership and MSM class.  From a global perspective, Hussein switching to Euros was more of an America-only problem, and not a very big one, at that.

Qaddaffi proposed something different.  He basically proposed a gold-back "Euro" equivalent for Africa.  That was a much more of an international problem.  No longer could French firms, in particular, easily loot their old colonies.  It would also send the wrong message for populations that governments could work together for a common good.  In the case of Libya, it was literally a strike at the ENTIRE neoliberal order so it was no longer just confined to just one Western power.  It would have been a blow to every single one of them at the same time which is precisely why the "international" response was so complete and unified.

In reply to by DingleBarryObummer

veritas semper… crazzziecanuck Mon, 04/09/2018 - 11:48 Permalink

I congratulate you for your comment. Great understanding of geopolitics.

The AAZ empire is throwing ALL it has and it can against Russia and China ,trying to stop the inevitable ,the OBOR and petro-yuan ,backed by GOLD.

Too late. Even if Russia and China and their satellite countries will take some loses , this will not stop the long term plan that they put in motion for the final destruction of the hegemon and their financial parasite system ,that is destroying the world.

So ,let me ask the exceptionals this : if you are so great , so wealthy , so strong ,why are you SO AFRAID  of a little competition ?

In reply to by crazzziecanuck

DingleBarryObummer Mon, 04/09/2018 - 08:06 Permalink

Additionally, over the weekend, Donald Trump warned of a "big price to pay" in response to reports of a chemical attack outside Syria’s capital, saying President Vladimir Putin and Iran “are responsible for backing Animal Assad.”

Well I'm glad President Trump was patient and levelheaded, and waited for a proper investigation to take place before hysterically reacting.    /s