The decisions by the leading index providers come after Russia’s foreign reserves were frozen, while Moscow imposed capital controls and a ban on foreigners selling securities locally. Russia’s weighting in the FTSE Russell Emerging Markets Index is 1.3% and 1.5% in the MSCI Emerging Markets Index.
Following feedback received from its independent advisory committees, other market participants, and given the current market conditions, FTSE Russell said that in accordance with Rule 2.1 of the FTSE Russell Index Policy, “In the Event Clients are Unable to Trade a Market”, Russia will be deleted from all FTSE Russell Equity Indices effective from the open on Monday 7 March 2022.
The move affects 60 Russia index constituents listed on the Moscow Exchange (MOEX), including Gazprom, Lukoil, Rosneft, Sberbank and VTB, as well as Russia Global Depositary Receipts (GDRs) listed on the International Order Book, including
Russia will be designated as an “unclassified” market within the FTSE Equity Country Classification scheme. Once regular trading resumes on MOEX and all restrictions on non-resident investors have been lifted, the market will be re-evaluated as part of the FTSE Equity Country Classification process, the firm said in a statement.
Meanwhile, MSCI announced that its MSCI Russia indexes will be reclassified from “emerging markets” to “standalone markets” status. The reclassification decision will be implemented in one step across all MSCI indexes, including standard, custom and derived indexes, at a price that is effectively zero and as of the close of 9 March 2022.
The decision followed a consultation launched on 28 February 28 with international institutional investors on the accessibility and investability of the Russian equity market. During the consultation, MSCI received feedback from a large number of global market participants, including asset owners, asset managers, broker dealers, and exchanges with an overwhelming majority confirming that the Russian equity market is currently uninvestable and that Russian securities should be removed from the MSCI Emerging Markets Indexes., according to a statement by the firm
Consultation participants highlighted several recent negative developments that led to a material deterioration in the accessibility of the Russian equity market to international institutional investors, it said.