Up Next: Mass Delisting of Russian Stocks From US Bourses

I've got the Norilsk Blooze...

State of Palestine deniers the United States looking for ways to "punish" Russia over taking back territory it gifted to Ukraine leads us to all sorts of interesting places. The lack of trade ties between the US and Russia makes it difficult to apply sanctions, but that isn't to say Americans haven't tried using the WTO to get back at Russia.

Now we're coming to another way the Yanquis are trying to bash Russia. Instead of trade, how about the investment front? As it turns out, there are quite a few publicly-listed Russian companies being traded via American depositary receipts or ADRs. Being mostly state-affiliated enterprises, these would certainly do as bait for publicity-seeking US politicians by using their American presence as a backdoor for imposing sanctions.

And, by halting trading on Russian stocks in the possession of American nationals, massive downward pressure can be placed on these stocks:

When Russia’s first deputy prime minister urged companies to delist from overseas stock markets two days ago, he made a reference to concerns about the country’s “economic security.” While Igor Shuvalov didn’t specify what the security issues are, there may be reasons for the Kremlin to be concerned about stock trading as the U.S. and Europe threaten to step up sanctions against Russia, according to Gibson, Dunn & Crutcher LLP. The New York-listed equities of any company that the Treasury Department adds to the sanctions list would become off limits to U.S. investors, said Judith A. Lee, a sanctions lawyer at Gibson Dunn in Washington.

“If a company is designated, then any shares of that company in the control or possession of a U.S. person are blocked,” Lee said by e-mail on April 8. “Those shares could not be sold. That would really put downward pressure on the stock price.” The Bloomberg index of the biggest Russian companies traded in New York rose 0.2 percent yesterday, capping a decline of 19 percent this year. The measure has plunged almost twice as much as the benchmark Micex gauge of Moscow-traded equities, which has fallen 10 percent. 

Political risk analysts see Russia's move as an attempt to cut off vulnerabilities as the US seeks to expand sanctions past government officials to state-affilicated enterprises:

Chris Hamilton, a spokesman for the U.K. Financial Conduct Authority declined to comment on how deeper sanctions against Russia could affect holders of Russian stocks listed in London. Hagar Chemali, a Treasury spokeswoman, also declined to comment.

“So far sanctions have been imposed on individuals and their assets,” Charles Hecker, the global research director at Control Risks Group in London, said by phone yesterday. “What we could move to next are companies and those companies’ assets.” State-owned Russian companies or “Russian companies that have a great deal of political exposure” could be on a new sanctions list, Hecker said.

Nuff said. Let's party like its 1949.