In an obvious ripple effect of the ongoing Russia-Ukraine war, trading volumes in major markets of Moscow Exchange, Russia’s largest exchange group, collapsed by significant numbers.
This is according to figures contained in the latest monthly trading volume released by the exchange on Thursday.
While the markets grew by 5.2% from RUB 74.3 trillion in May 2021 to RUB 78.2 trillion last month, major volumes slumped.
The exchange’s money and foreign exchange (forex) spot markets surged 61.9% and 22.4%, respectively, led the overall market growth recorded in May.
Equity & Bond
According to the exchange, the equity and bond market sank -240% month-on-month (minus overnight bonds). Total trading volumes collapsed to RUB 995.4 billion from RUB 3,380.7 billion recorded in the same month last year.
Additionally, the exchange disclosed that trading volume in shares, depository receipts and investment fund units sank -72% from RUB 2,162.3 billion in May 2021 to RUB 596.9 billion, which was generated last month.
Moreover, the average daily trading volume (ADTV) was not spared. It plummeted -69%, from RUB 108.1 billion to RUB 33.2 billion.
Further, the trading volume in corporate, regional and sovereign bonds plunged from RUB 1,218.4 billion in May last year to RUB 398.5 billion last month. It was a -67% decline.
Again, ADTV was not spared in this category. It nosedived -64%. Volumes dropped to RUB 22.1 billion from RUB 60.9 billion recorded in May 2021.
Despite the falls, Moscow Exchange said 24 new bond issues with a combined value of RUB 278.5 billion were placed in May 2022.
However, overnight bonds account for RUB 196.0 billion of this value.
Derivative & FX
Moscow Exchange’s derivatives market collapsed by almost half (-46%), falling from RUB 10.4 trillion in May 2021 to RUB 5.6 trillion last month.
What's more, ADTV in this market sank to almost the same measure of -40%, declining to RUB 309.8 billion last month from RUB 518.4 billion recorded in May 2021.
For another thing, the FX market saw major declines. Its trading volume plunged -38% to RUB 16.1 trillion from RUB 26.0 trillion.
Of this volume, while spot trades accounted for RUB 7.7 trillion, swap trades and forwards brought in RUB 8.4 trillion.
Just like in other markets, ADTV in this market plummeted -31% where volumes sank from RUB 1,302.2 billion to RUB 892.3 billion.
In April, the exchange’s trading volumes reached RUB 22 trillion as opposed to RUB 34.2 trillion seen in April 2021.
Money, FX Spot Markets Rise
However, unlike other markets, Moscow Exchange’s money market grew 61.9% from RUB 34.2 trillion in May 2021 to RUB 55.4 trillion last month.
Also, ADTV in this market climbed from RUB 1,709.1 billion to RUB 3,075.0 billion.
In addition, the FX spot market saw a 22.4% increase in May 2022, the exchange said in the published metrics.
Further, the repurchase agreement (repo) market recorded growth. Moscow Exchange’s central clearing counterparty-cleared repo segment added 34.5% last month, reaching RUB 26.7 trillion.
This growth includes the general collateral certificates repo segment which topped 83.8% to hit RUB 10.6 trillion.
Additionally, the precious metals market felt the heat. Spot and swap trades in this category of the market collapsed -80% to RUB 4.1 billion from RUB 21.2 billion in May 2021.
Out of the recorded RUB 4.1 billion, total trades in gold came in at RUB 3.8 billion (1.0 t) and RUB 0.2 billion (4.6 t) for silver.
A Possible Build Up?
In March, the Central Bank of Russia suspended stock trading on Moscow Exchange for several weeks with certain exceptions.
Also in March, the country’s apex monetary authority issued a new order suspending banks from selling forex until September 9.
The Federation of European Securities Exchanges (FESE) in the same month excluded Moscow Exchange from its association after condemning the Russia-led invasion of Ukraine.
In the week after Russia invaded Ukraine, the central bank shut down Moscow Exchange completely throughout the week, the longest closure of the stock exchange since 1998, according to Bloomberg.
“It’s really the end of the Russian financial market we are used to,” Leonardo Pellandini, a strategist at Bank Julius Baer, said at the time.
“It just seems like it is becoming an uninvestable market, at least for foreigners. There are too many uncertainties."
