US sanctions batter Russian markets with shares in Oleg Deripaska's Rusal and En+ Group tumbling

Courtney Goldsmith
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Oleg Deripaska is having a rough morning

Russian shares and other financial assets took a hammering on global trading floors yesterday as investors reacted to a fresh round of US sanctions targeting some of Russia’s most prominent tycoons.

The biggest hit was taken by Russian oligarch Oleg Deripaska's firms, with aluminium giant Rusal's Hong Kong-listed share price more than halved, while shares in En+, which listed on the London Stock Exchange in November, closed more than 40 per cent down.

Rusal’s dollar bonds slumped to record lows, leading a rout of Russian corporate debt.

Shares in a number of Russian firms plunged on London's stock exchange, including steelmaker Evraz (down 16 per cent at the time of writing) and miners Polyus (down 26 per cent) and Polymetal (down 11 per cent).

Russia's currency meanwhile had its biggest one-day fall since 2016, dropping 3.39 per cent.

Rusal, En+ and six other firms linked to aluminium tycoon Deripaska were included in fresh sanctions announced by the US on Friday. In total, 12 companies had sanctions imposed for profiting from a Russian state engaged in "malign activities".

According to Bloomberg's Billionaires Index, Deripaska's net worth has dropped by $1.1bn (£778m) on the back of the sanctions, with his total fortune falling by $2bn so far this year.

The Kremlin called the sanctions "scandalous" and "illegal" and said it would retaliate and protect any affected firms.

In a filing to the Hong Kong stock exchange yesterday, Rusal said it is "highly likely" the sanctions will have a material adverse impact to the company and its prospects, and that this may cause it to default on its loans.

Rusal said it is evaluating the possible impact to its financial position, and that the publishing of its annual report for the year to December may be delayed. In a letter seen by Bloomberg, it asked aluminium customers to stop payments.

"Shareholders and potential investors are advised to exercise extreme caution when dealing in the securities of the company," it said.

The price of aluminium rose as much as four per cent yesterday on supply disruption concerns in regards to the crisis at Rusal, which produced 3.7m tonnes of primary metal last year, accounting for around six per cent of global output, according to analysts at SP Angel.

En+ echoed Rusal's comments in a statement yesterday, adding that it was informed Citi had closed the books of its global depositary receipts programmes on Friday. En+ said it is "analysing the situation" with its legal advisers.

Two En+ directors also stepped down in yesterday's aftermath: non-executive director Zhao Guangming and independent director Dominique Fraisse.

The US Treasury has said investors have until 7 May to divest or transfer debt, equity or other holdings in Rusal, En+ and Russian carmaker Gaz.

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