Russian stocks rebound after Crimea chooses to breakaway

Stocks in Russia shrugged off fears of a market collapse after the Crimea referendum, as they opened higher on Monday. Analyst say domestic investors view possible Western sanctions as purely symbolic, as they don’t concern corporate assets.

Both Russian key indices – the RTS and the MICEX - opened higher
on Monday, with the dollar –denominated RTS adding 1.13 percent
at midday, Moscow time, and the ruble-denominated MICEX up 1.17
percent.

Experts say all major investor fears had already been priced into
Russian stocks prior to the Crimea referendum, as the country’s market were
pretty volatile and pessimistic over the last two weeks.

"For the time being there is nothing new: they carried out
the referendum, they haven't yet announced sanctions. Simply for
the time being, there are Russian investors who are buying in the
belief that there is a bright future," Dmitry Ryzhkov, a
trader at Renaissance Capital told Reuters.

The US and the EU have been repeatedly threatening Russia with
sanctions, which so far look mostly political. The German
newspaper Bild said on Friday that about 100 leading Russian
officials could face visa restrictions.

"Of course there will be sanctions from the West, but for the
time being they concern officials and not corporate assets,”
Oleg Dushin, Zerich Capital analyst, wrote in a note to Reuters.

The US and European Union foreign ministers are meeting in
Brussels later on Monday to discuss sanctions against Russia,
that are largely expected to deal mostly with visa bans and a
possible asset freeze.

However, given the western strong dependence on Russia’s oil and
gas, any economic sanctions could seriously bite back, Jeff Sahadeo, director of Carleton
University’s Institute of European, Russian and Eurasian Studies
told Bloomberg.

If the West “puts down the card of energy sanctions, it
becomes a question of who blinks first,” he said.

On Monday the Russian ruble has lost against the dollar, while
strengthening against the euro. The ruble stood at 36.6 per
dollar and went up to 50.8 against the euro, according to the
Central Bank of Russia.

On Sunday, the citizens of Crimea overwhelmingly voted for joining
Russia, with 96.77 percent saying they would want to rejoin the
country, rather than remain a part of Ukraine and return to the
Ukrainian Constitution of 1992.