(MOSCOW, RUSSIA) – Russia’s wealthiest individuals are rapidly reshaping their investment holdings, moving money into cryptocurrency, foreign property and private investment funds as the country’s stock market extends a historic decline.
The assessment comes from Ukraine’s Foreign Intelligence Service, which reported that the Russian stock market has been falling for 19 consecutive weeks. The agency said the rush to offload Russian securities and shift assets out of the country points to a collapse of faith in the future of what it called the financial project named Russia.
By mid July, shares in leading Russian companies had suffered heavy losses. Gas giant Gazprom and state bank VTB each dropped more than 21 percent. Metals producer Nornickel fell 24 percent, airline Aeroflot lost 27 percent, and telecoms firm MTS declined 28 percent.
The country’s largest gold miner, Polyus, shed more than half its value, losing 53 percent over just two weeks.
According to analyst estimates cited by the intelligence service, the Russian stock market has lost roughly 30 percent of its value since the start of April this year, falling back to levels last seen in 2016. The agency noted that such a situation has not been recorded over the entire period of statistical tracking, which began in 1997.
The intelligence service used a comparison to show the gap between Russian and international returns. An investor who put USD 1,000 (GBP 770, EUR 920) into Apple shares at the start of 2006 would hold a profit of more than USD 130,000 (GBP 100,100, EUR 119,600) today. The same sum placed in Gazprom shares over the same period would have resulted in a loss of more than USD 600 (GBP 462, EUR 552).
The agency added that Russia’s finance ministry has cancelled federal bond placements three times over the past month. Investor bids were so unattractive for the issuer that the ministry effectively withdrew from auctions without raising the funds it had sought.
The distress in financial markets mirrors wider pressure on the Russian business environment. Previous reports have indicated that small businesses in Russia are sliding into mass defaults and that companies do not expect economic conditions to improve.