May 18, 2022

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MSCI Exclusive Says Russia Removal From Indexes 'Natural Next Step'

MSCI Exclusive Says Russia Removal From Indexes ‘Natural Next Step’

LONDON (Reuters) – Russia’s stock market has become “uninvestable” after tough new Western sanctions and central bank restrictions on trading, making removing Russian listings from indices a “natural next step,” a senior executive at stock index provider MSCI says. He said on Monday.

“It would not make sense for us to continue listing Russian securities if our clients and investors could not deal in the market,” Dimitris Melas, head of index research at MSCI and chair of the Index Policy Committee, told Reuters.

“It is clear to all of us that trading the market is very difficult, and in fact, it is not possible to invest in it today.”

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Financial institutions around the world have begun to wind down or suspend their business in Russia, after heavy sanctions imposed by Western governments on Russia in the wake of its military invasion of Ukraine last week. Read more

Melas said the company may start consulting with investors immediately, and its result could be announced within days along with the action to be taken.

MSCI announced Thursday that it has frozen the index and will not implement changes to the Russian securities it previously announced as part of its February review. Read more

“The next natural step we could take – we haven’t made any decision yet – but the next natural step might be to actually consider removing MSCI Russia or removing Russian securities from our indices,” Melas added.

Later on Monday, MSCI issued a statement Seeking feedback on the current level of access and investments in the Russian stock market for international institutional investors.

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MSCI also said it will release more communications before the end of the week after reviewing comments from market participants.

Russia (.MIRU00000PUS) It has a weight of 3.24% in the MSCI Emerging Markets Index (MSCIEF) And a weight of about 30 basis points into the global benchmark of the index provider (.MIWD00000PUS.).

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Additional reporting by Sujata Rao and Karen Stroecker; Editing by Sam Holmes

Our criteria: Thomson Reuters Trust Principles.