Russian Stocks Plunge in Worst Day As 2022 Amidst Dimming Ukraine Peace Hopes
Moscow – Russian stocks experienced their steepest single-day decline in over three years on Wednesday, as dampened prospects for a resolution to the conflict in Ukraine triggered a broad sell-off. The Moscow Exchange (MOEX) Index plummeted 4.05% to close at 2,563.3 points, its lowest level since December 2024, erasing over 22% – or 1.3 trillion rubles (approximately $15.9 billion) – of market capitalization since february.
The downturn followed remarks by Deputy Foreign Minister Sergei Ryabkov, who stated that the momentum toward a potential peace agreement following earlier discussions had “been weary,” and that relations with Washington were “collapsing.” This assessment coincided with President Vladimir Putin reaffirming the Kremlin’s commitment to achieving its objectives in Ukraine, telling military officials their goals remained “unconditional.”
Leading the decline were shares of major Russian companies. Gazprom fell 4.1%, Sberbank dropped 4.9%,VTB shed 4.7%, and Rosneft decreased by 2.5%. Severstal and Aeroflot both experienced declines of nearly 5%, while Rostelecom, inter RAO, and Magnitogorsk Iron & Steel Works lost over 5% of their value.Mechel suffered the largest percentage drop, falling 6.7%.
Analysts attribute the market’s reaction to escalating geopolitical tensions and a shift in investor sentiment. “Geopolitical tensions continue to pressure investors,” explained Yaroslav Kabakov, strategy director at Finam. PSB Bank analysts noted a “wave of pessimism” following a period of inflated expectations. The MOEX index has now registered five consecutive weeks of losses.
The weakening stock market performance reflects broader concerns about Russia’s economic trajectory. While bolstered by military spending in recent years, the economy is showing signs of slowing, with GDP growth nearly stalling at 0.4% year-on-year in July and August. Civilian industries are particularly affected, experiencing declines in output including clothing (-9.1%), furniture (-12.7%), food (-2.1%), and metals (-8.4%).
Recent economic forecasts from the World Bank further underscore these challenges, projecting growth of 0.9% in 2025,0.8% in 2026, and 1% in 2027.Andrei Khokhrin, CEO of Ivolga Capital, cautioned that sustained declines in the stock market often foreshadow deeper economic difficulties.
