Retail investors fall for the fall in Russia-focused stocks
Retail investors fall for the fall in Russia-focused stocks
While big investors in the West have chided Russia in recent weeks, a small group of armchair investors see the deal and are shrugging off any moral merit.
At a time when many in Britain are donating money to support relief efforts in Ukraine after Russia’s invasion, others are looking to profit and making suggestions on social media to ‘buy the dip’ .
“It’s a once-in-a-lifetime buy for me,” an investor said about stock in Russia-focused steel and mining conglomerate Evraz on the Reddit website on March 4.
Exactly six days later, Average’s London-listed shares were suspended after its largest shareholder Roman Abramovich was sanctioned by the UK, meaning that any investor who took a punt on the stock could earn money. went.
Despite the risks, Russia-focused investments have proven popular with retail investors, even as the war has taken a heavy human toll.
Russia – which calls its actions “special operations” – fired missiles on Friday at an air base near Lviv, a city where hundreds of thousands of refugees are sheltering away from Ukraine’s battlefields.
Major investors have called Russia “uninvestable,” but DIY investors — many of whom went stock-picking during the pandemic’s “stokes” trading frenzy — have remained adamant.
London-listed stocks of Russia-focused companies – including Abramovich’s Average and gold and silver producer Polymetal – have recently jumped in the most-bought stock tables across several of Britain’s biggest investment platforms, according to Reuters on their websites. According to the review.
The average stock fell 67% before its suspension since the start of Russia’s invasion on February 24, and Polymetal is down more than 85%.
“It’s playing with fire and sounds crazy to me, but some people want to make aggressive bets. And that will never change,” said Holly McKay, founder and chief executive of personal finance website Boring Money.
Markets regulator Financial Conduct Authority told Reuters it was monitoring the situation.
“Investors should take care when investing in companies that may be affected by Russian aggression,” the regulator said.
The average was among the top five most bought stocks last week by clients on the AJ Bell, Interactive Investor (ii) and Hargreaves Lansdowne platform prior to the stock’s suspension.
It was also the stock with the highest buy-sell ratio on the Freetrade platform. All four cater exclusively to retail investors, non-professionals who trade securities through online platforms.
The UK claims in its sanctions that Average helped provide financial support to destabilize Ukraine and may have supplied steel used to produce Russian tanks. Avraj denied the claims.
AJ Bell stated that the average holding would remain in the client portfolio at the price at which it was suspended, while ii stated that the shares were being held until further information became available.
Polymetal was also one of the top 10 most bought stocks across platforms reviewed by Reuters last week and topped AJ Bell’s list.
The company is not subject to UK sanctions and its shares are still trading, although the stock was removed from the index by FTSE Russell on Monday after several brokers refused to trade their shares.
Polymetal, which has eight gold and silver mines in Russia and generates most of its revenue in the country, has said the situation in Ukraine is “terrible and heartbreaking”, and called for a peaceful solution.
‘Take your own decisions’
Retail investors have become a major force in the markets over the past few years as more platforms have offered commission-free trading and stock-pickers become more vocal on social media.
Online platforms are the fastest growing part of the consumer investment industry in the UK, with newcomers more likely to be young or first-time investors.
Mackey said platforms may need to consider providing more warnings or ethical filters as more established investors have in the Ukraine crisis, though he cautioned against being too restrictive.
Regulators have in the past warned of risks to retail investors, particularly after the Brexit vote in 2016 and the suspension of a British asset fund in 2020 following the COVID-19 lockdown, and the suspension of investor Neil Woodford’s flagship fund and subsequent with the fall. in 2019.
Hargreaves Lansdowne and AJ Bell said they primarily provided a platform for clients to make their own investment decisions, taking into account their ethical beliefs.
A spokesperson for Hargreaves Lansdowne said, “Our role is to help inform so that customers can make their own decisions,” adding the company was “horrified by this human tragedy” and was working with regulators.
Freetrade said it was monitoring the situation, liaising with regulators, and communicating regularly with clients to educate them about the risks of investing in Russian-linked stocks.
ii, which was bought by investment giant Aberdon in December, said the trades involving Russia were not representative of a specific investor, adding that it was working on ethical filters for assets, although these Russia-linked trades were not representative of a specific investor. were not specific.
“There will always be some who choose to rely on extreme volatility,” said a spokesperson for ii. “This has always been the case, and we are not here to judge.”
In this file photo, a man walks past the Stock Market Building in Downtown Moscow, Moscow. , photo credit: Natalia Kolesnikova
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