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Pictet latest to suspend Russia fund

The suspension will be lifted "as soon as market conditions allow".
Tsar Cannon in Moscow Kremlin in Moscow, Russia. Winter scene of Moscow Kremlin.

Pictet has confirmed to our sister publication, Portfolio Adviser, that it, too, has taken the decision to freeze its €567m ($630m) Russia fund “to protect existing investors”.

It follows earlier moves from Liontrust and JP Morgan Asset Management.

Blackrock, which is home to the iShares MSCI Russia ETF, told Portfolio Adviser that it is “monitoring the guidelines issued by regulators”.

Meanwhile, HSBC announced that 28 February would be declared a non-dealing day for its MSCI Russia Capped Ucits ETF. This was after it introduced swing pricing for its HSBC GIF Russia Equity fund on 25 February.

‘Seriously jeopardised trades’

In a letter to shareholders on Monday, Pictet said “in light of the current and ever-evolving circumstances associated with Ukraine/Russia situation” that trading in its Russian Equities fund would be suspended.

“The current political situation and liquidity constraints make it impossible for the brokers to trade securities on the Russian stock exchange, and even if trading becomes possible again in the future, the possibility […] to convert Russian roubles into US dollars would be seriously jeopardised such that trades could not be settled in a normal manner.”

As a result, the calculation of the net asset value of shares was suspended with effect from 28 February. Pictet said the suspension will be lifted “as soon as the market conditions allow it”.

All subscription, conversion and redemption requests received after 1pm on Friday 25 February will be deferred until the next valuation following the suspension period, the board said.

They will be processed on a ‘first in, first out’ basis.

Bans, interest rate rises and forced sales

The sanctions imposed on Russia by the west are having some effect, although critics argue they do not go nearly far enough and more should be done to help people on the ground in Ukraine.

On Monday, the Bank of Russia closed trading on the Moscow Stock Exchange’s stock and derivatives sections and confirmed they would remain closed on 1 March.

The bank also released a raft of announcements which, among other things, put “temporary bans” on non-residents selling securities.

The central bank’s board of directors increased its key interest rate to 20%, up from 9.5%, to steady markets as the rouble crashed nearly 30%.

“External conditions for the Russian economy have drastically change,” the board wrote. “The increase of the key rate will ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risks.”

In a further move, the Russian Ministry of Finance and Bank of Russia instructed residents participating in foreign trade to sell 80% of the revenues payable to them under all foreign trade agreements starting from 28 February.

Part of the Mark Allen Group.