Trading of Russian Companies on US Stock Exchanges Halted

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The New York Stock Exchange (NYSE) and NASDAQ have halted trading of Russian companies trading on their exchanges effective yesterday Feb 28th, 2022. The halt will be in effect until further notice. It is not clear when the halt will be lifted. Until then investors will not be able to buy or sell them. Below is an excerpt from a Reuters article:

NEW YORK, Feb 28 (Reuters) – Nasdaq Inc (NDAQ.O) and Intercontinental Exchange Inc’s (ICE.N) NYSE have temporarily halted trading in the stocks of Russia-based companies listed on their exchanges, their websites showed.

The halts were due to regulatory concerns as the exchanges seek more information following economic sanctions imposed on Russia because of its invasion of Ukraine, people familiar with the matter said.

The Nasdaq-listed stocks halted are: Nexters Inc , HeadHunter Group PLC (HHR.O), Ozon Holdings PLC (OZON.O), Qiwi PLC (QIWI.O) and Yandex (YNDX.O).

Source: NYSE, Nasdaq halt trading in stocks of Russia-based companies, Feb 28, 2022, Reuters

The NYSE-listed stocks that are halted are:

  • Cian PLC (CIAN)
  • Mechel Steel (MTL)
  • Mobile Telesystems Public Joint Stock Company (MBT)

Are Russian stocks trading on the OTC markets also halted?

Currently OTC Markets Group has NOT halted Russian stocks trading on the OTC markets. Per the Reuters piece, they are seeking clarification regarding the sanctions imposed recently on Russia and their impact on trading depository receipts of Russian firms.

So major firms like Gazprom(OGZPY), Lukoil(LUKOY), Surgutneftegas(SGTZY), etc. will continue to be traded as usual.

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Disclosure: No positions

Major Crisis Events Since 1940 and US Stock Market Returns

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The Russian invasion of Ukraine will go down in history as one of the major crisis events of the 21st century. For more than two years the world has been dealing with disastrous impacts of Covid-19. Though the pandemic has not ended in any way, Russia decided its the best time to start a war on Ukraine. Almost overnight the world’s attention has shifted from Covid-19 to this new war.

According to an article by Dr.Shane Oliver at AMP Capital, there is a long history of major crisis events that impacted equity prices. In almost most of these cases, initially the stock market fell sharply only to rebound in the following months and years. Since World War II, the average decline for US stocks has been 6%. But six months later stocks were up by 9% on average. And the returns were even better after 1 year at around 15%.

The following table shows the major crises since 1940 and the performance of US stock market later:

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Source: The escalation in Ukraine tensions – implications for investors by Dr.Shane Oliver, AMP Capital

Comparing the Military Might of Russia and Ukraine: Infographic

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The Russian invasion of Ukraine is now on Day 5. Though it is too early to conclude anything, it appears the war is not going as planned for Russia. An article at The Guardian discusses a few of the early mistakes by Russia particularly the limited use of air force. With that said, the military forces of Ukraine is much smaller than of Russia. The following infographic from Radio Free Europe/Radio Liberty shows a comparison of the military might of the two countries:

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Source: RFE/RL Infographic

The Composition and Key Indicators of the Australian Economy: Infographic

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The Reserve Bank of Australia has published the updated snapshots of the Australian Economy. The following two are interesting with data as of Feb, 2022.  The composition of the economy shows that natural resources account for about 69% of exports and the largest export market is China. The average price of a residential dwelling at A$864K is shocking. Inflation at 3.5% is lower than the rate in the US. The Unemployment Rate is also low at 4.4%.

The Composition of the Australian Economy:

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The Key Indicators of the Australian Economy:

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Source: RBA Snapshots, The Reserve Bank of Australia; Hat Tip: MarketIndex

S&P 500 Intra-Year Declines and Total Returns by Year 1980 to 2021

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Volatility has returned to the US equity markets with a vengeance. Stocks were flying smooth last year and always seem to go in only one direction. That is no longer the case. Right the start of the year, starts are swinging wildly taking  investors on a stomach churning ride. Even professional investors are struggling to keep with the market as their bets on hi-flyers start to sour.

But retail investors have an edge over professional traders and investors. Unlike them, retail investors need not worry about beating a benchmark or increasing their reputation or even earning a bumper bonus. In times like these retail investors can simply ride out the storm and not make any rash decisions. The key is to be patient and not get carried away by emotions.

The performance of the S&P 500 over many decades shows that stocks mostly tend to earn a positive return for the year despite going thru dramatic intra-year declines as shown in the chart below:

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Source: Equity Market Correction Opens Door for Quality Recovery by Chris Hogbin, AllianceBernstein

When stocks fall on a given day this year, one can always find a reason for that. Some of the reasons include:

  • Rising interest rates
  • Uncertain growth rates
  • Covid-19
  • Russian invasion of Ukraine
  • Supply chain issues
  • China attacking Taiwan
  • Relentless rise in oil prices and so on.

The list of causes of a plunge are endless. Stocks always try to climb a wall of worry. There is hardly any year or day where everything is perfect. There will be always be something negative happening somewhere in the world.

Instead of worrying about all these factors that are beyond one’s control, investors can simply focus on things that are under their control and adhere to their long-term investment goals. So even though stocks may swing wildly most of the times they return positive returns.

Disclosure:

  • SPDR S&P 500 ETF Trust (SPY)

Disclosure: No positions