Russian Stocks Rise as Ban on Shorts Is Lifted, Hours Extended

(Bloomberg) -- Russian equities advanced as the nation partly lifted the short-selling ban on local stocks on Thursday, removing one of the measures that helped limit the declines in the market after a record long shutdown.

The MOEX Russia Index jumped 7.6% by the close on Thursday, with gas giant Gazprom PJSC and oil producer Lukoil PJSC leading the gains. Professional market participants, including brokers and banks, are now able to short some of the biggest Russian equities, while the clients of brokers, including retail investors, will continue to be restricted from short sales, the Moscow Exchange said. 

The Bank of Russia also said equities trading hours will be extended from a shortened four-hour session to the regular schedule of 9:50 a.m. to 6:50 p.m. Moscow time, according to a website statement. 

Since reopening from a month-long shutdown last Thursday, Russian stocks have gained over 9% and their daily moves have been limited. Prior to the resumption of trading, the Russian government took measures, including preventing foreigners from exiting local equities and banning short selling, to avoid a repeat of the 33% slump seen on the first day of the Ukraine invasion last month. Russian equities are the world’s worst performers so far this year.

“The market will remain highly volatile as mostly locals and retail investors trade, and they are always crowd-minded,” said Dmitry Polevoy, an analyst at Locko-Invest in Moscow. “Changing sentiments on the conflict will remain a key factor.” 

In the latest geopolitical developments, direct talks between Russia and Ukraine were set to resume Friday, according to a top Ukrainian official, seeking to build on in-person talks this week in Turkey that failed to produce significant progress. Separately, Turkey is trying to broker a meeting between Russian and Ukrainian foreign ministers. 

The restriction on foreigners’ transactions in any Russian securities remains in place, and the Bank of Russia said in emailed comments on Wednesday that this ban is open-ended. 

Earlier this month, the government announced that as much as $10 billion from the National Wellbeing Fund may be spent to buy battered local stocks. Russia has so far refrained from using its sovereign wealth fund to prop up equities, Bloomberg reported last Friday, and Finance Minister Anton Siluanov confirmed this on Monday. 

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