Traders across the world looking to invest in the stock of Qiwi PLC (QIWI) woke up to news on Monday that NASDAQ had suspended trading for the stock, amongst other Russian-based financial securities. The exchange had clarified that these halts in trading were enforced in order to meet the requirements of the regulatory framework, as a result of the recently imposed economic sanctions on Russia. These developments make the prospects of the QIWI stock appear grim, with the loss in liquidity causing a further decline in the intrinsic value for the stock.
Invasion of Ukraine & Economic Response
Since Russian forces initiated the invasion of Ukraine on Wednesday last week, Russian-based stocks had seen a mass plummet, sparked by a widespread sell-off. This market-wide downward spiral had been sparked by uncertainties surrounding the economic future, as well as the possibilities of punishing sanctions. This coincided with a surge seen in US-based defense stocks of an equal proportion, again which is clearly understandable, given the expected increase in the defense budgets of NATO countries.
Despite the inherent risks surrounding Russian stocks, the QIWI stock saw remarkable growth of up to 14.8%, a mere day after the invasion began, after investors rushed to buy back stocks that were sold amidst the bleak future. The brief surge followed hesitation by a number of prominent EU member states showing hesitance in cutting the Russian banking system off SWIFT, which brought relief to investors. This however was short lasted, as trading of the Russian-based stock was shut down earlier on Monday, which seriously restricted stock liquidity.
Uncertainty regarding QIWI, as well as other Russian-based publicly listed stocks is likely to persist, which puts the future trajectory of these stocks towards a downward spiral. Given the weight of the sanctions on the Russian Federation (which is being dubbed a financial war) institutions are increasingly distancing themselves from Russian assets. Those holding the QIWI stock are unable to sell off the security, despite a fall in intrinsic value, given trade suspension on NASDAQ.
Conclusion
QIWI stock, along with other Russian-based tradeable securities are no longer available for buy and sell in NASDAQ, following regulatory measures in line with global sanctions against the Russian Federation. As a result, the future for Russian equities continues to look bleak amidst the market-wide plummet.
