Several UK-based firms are reportedly rushing to get rid of their Russian assets as part of the UK, US, and EU governments’ efforts to further isolate Moscow’s economy following its invasion of Ukraine.
Investment firm Abrdn, finance firm Legal & General, and state-run workplace pension scheme, Nest, have all stated that they will be trying to sell their Russian stock holdings. While gas supplier, Centrica, became the third British energy company to cut off ties with Russia by announcing the end of its gas supply agreement with Gazprom, a Russian state-owned gas company, earlier this week.
Legal & General Investment Management (LGIM), the asset management arm of Legal & General, has already cut its exposure to Russian bonds and shares and is seeking to sell its positions in sanctioned companies whenever the market conditions allow as the Moscow stock exchange remains closed.
Centrica CEO, Chris O’Shea, stated that the firm plans on exiting the gas supply agreements with its Russian counterparts urgently, especially Gazprom which supplies gas to Centrica to sell to British households.
Nest also stated that it will be removing all of its investment in government bonds as well as companies in Russia as soon as possible, while Abrdn and USS (Universities Superannuation Scheme) would also be reducing their investments in the country.
Commodity trading firm Glencore, which holds significant stakes in Russian state-controlled oil major Rosneft and mining major En+ Group, has said that it was reviewing its business activities in Russia as well as its equity stakes in the two companies, but has not confirmed if it will be divesting.
Simon Pilcher, CEO, USS, stated that the firm has sold almost half of its $598 million investments linked to Russia in the past few weeks, adding that there is a financial and moral case for divestment in its Russian holdings.
With investors dumping shares to prevent their returns get hit by more sanctions, chaos is expected to break out when Russian assets start trading again.
Meanwhile, some economists have predicted an economic collapse in Russia from the pressure with the future earnings of companies in the country likely to dip as well.