The Moscow Exchange experienced a massive capital outflow in February. Foreign investors got rid of all the main assets, pulling 38.2 billion rubles out of the Russian stock market and 74 billion rubles out of the public debt market. As a result, the OFZ market fell by 22% to a 5-year low.
The refusal of foreign investors to cooperate with Russian companies was triggered by high risks of new sanctions from the United States. Even the fact that investment flows had not materialized in February did not prevent them from leaving the market. The recent sanctions on Russian government officials and the heads of its security services did not spook investors, while fear of getting stung by new tougher restrictions on Russian oligarchs and sovereign debt forced them to steer clear of the country.
In addition, the Russian market came under pressure after the White House announced that it was preparing to take against Russia on several fronts. The Biden administration reported that it was considering new economic sanctions and a cyberattack as a response to the large-scale hacking of American government agencies and corporations discovered late last year. Both time-synchronized steps are expected over the next three weeks, the sources said.
Despite the sanctions-related uncertainty in the market, the MOEX index ticked up by 2.2% in February, hitting an all-time high in the middle of the month. The largest Russian banks bought out 33.6 billion rubles worth of non-residents' capital, thus enabling the market to hold firm at its highs.
