Putin's War Sinks Russian Stock Market Amid 'Sense of Catastrophe'

Russia's stock market is experiencing a historic sell-off, wiping out nearly 30% of its capitalization in just a few months and sending it back to 2016 levels. This dramatic decline signals a fundamental reassessment of Russian assets, moving beyond a simple market correction.

The downturn has hit major Russian corporations hard. Gazprom has lost 21% of its value since July, while state-controlled bank VTB and private oil firm Surgutneftegaz have each dropped over 20%. Retailer Magnit is down 19.6%, and even gold producer Polyus Gold has seen its value more than halved in just over two weeks. Companies linked to sanctioned oligarchs, such as Severstal and Norilsk Nickel, have also suffered significant losses, as has Aeroflot and mobile operator MTS.

Analysts attribute the market's collapse to a confluence of factors. Geopolitics, specifically the ongoing war initiated by President Putin, looms large, alongside the persistent threat of additional Western sanctions. Expectations of interest rate hikes by the Bank of Russia due to a fuel crisis are also contributing to investor unease.

However, some analysts point to an additional, more concerning factor: a "hidden excess supply." This suggests that significant investors are systematically offloading their Russian assets. Reports indicate that billionaires, including those close to Putin, have been actively withdrawing funds from Russia in recent months, further exacerbating the market's decline and fueling a sense of impending catastrophe.

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The scale of the sell-off no longer indicates a local correction, but a complete reassessment of the valuation of Russian assets.