Russian market collapsed on Wednesday, alongside the largest bank of Russia, Sberbank, plunging 95% in London markets as US and NATO sanctions hammer the Russian economy. The largest banks usually have the largest clients, and three of Russia’s top companies such as Gazprom, Lukoil, and Novatek all slid to similar levels resembling penny stocks.
The stock exchange in Russia is still suspended in an attempt to mitigate damage of the oncoming and growing sanctions from the US and NATO allies.
Sberbank plunged to a penny on Wednesday after opening the year at $16.12. Sberbank has 135 million customers.
Gazprom, a powerhouse in the Russian energy industry fell to $0.02 down 97%. Traders are already placing their bets, a stock market investor shares is views in a forum:
“I bought I would have easily averaged down my position and eventually exit with a profit. Most probably the share trading will resume when the price is around 2$ or so…
The Whales who bought today will sell with 100x profits..and keep suppressing the price at their will. Company market cap is just 250mln right now (and today they settled a bond expiring on Monday worthed 1.3bn) just the infrastructure is probably 50 bn $ excluding the gas under the soil… if I remember well there are something like 400k employees and last dividend per share was 39 cents….
Of course the events in Russia have an impact on this company but come on you can’t value so cheap a company with such infrastructure. It was trading on the region of 8 to 10 $….4 or 5 $ would be a significant price reduction…but not 3 cents”
Gas producers, Lukoil and Novatek, also fell 97% as investors dumped their shares.
Related reading : Russia Continues to Cut Gas Supplies to EU Countries
“Russian equities are bleeding in London trading and uncertainty has hit maximum with European sanctions over the weekend reaching levels never seen before,” said Peter Garnry, head of equity strategy at Saxo Bank.
What Led to The Collapse, What is The Aftermath ?
Last week and over the weekend, the move was made by the US and its allies to cut select banks from the International settlement messaging system, SWIFT. So far, Sberbank and Gazprombank have not been placed on the list.
Russia is prepared to buy their nation’s dip with $10 billion at the ready, undeniably leading to stronger nationalization amidst the situation in Ukraine along with Western sanctions. Unfortunately, retail clients are halted and are only allowed to sell as markets in Russia are set to open on Thursday.
Whales who were able to buy the dip will end up closing out their positions at 100x gains with the ability to suppress prices at will.
The move to close the markets three days was the longest closure since the 1998 financial crisis in Russia.
While conflict and bloodshed take place in Ukraine, economic warfare is taking place between the West and Russia.
“Russia’s economy is likely to have already suffered a double-digit economic contraction on the back of Western sanctions, a slump in the rouble and corporate exits with more economic pain ahead,” Victoria Scholar, head of investment at trading platform Interactive Investor, said.
So gazprom could trade under value right now. But what about bitcoin? Do you see undervalued or overvalued? Let us know in the comments and join the discussion on Twitter.