LONDON: While the West’s big investors have ditched Russia in recent weeks, one small group of armchair investors sees a bargain and is shrugging off any ethical qualms.
At a time when many in Britain are pouring cash into charities to support relief efforts in Ukraine after its invasion by Russia, others are looking to profit and offering tips to “buy the dip” on social media.
“For me it is a one (sic) in a lifetime chance to buy,” said an investor about stock in Russia-focused steel and mining group Evraz on the Reddit website on March 4.
Just six days later, Evraz’s London-listed shares were suspended after its biggest shareholder Roman Abramovich was sanctioned by the UK, meaning any investor who took a punt on the stock had that money frozen.
Despite the risks, Russia-focused investments have proved popular with retail investors even as the war has taken a heavy human toll.
Russia - which calls its actions a “special operation” - fired missiles at an airport near Lviv on Friday, a city where hundreds of thousands of refugees are sheltering far from Ukraine’s battlefields.
Major investors have called Russia “uninvestable”, but DIY investors - many of whom took up stock-picking during the “stonks” trading frenzy in the pandemic - have been undeterred.
London-listed stocks of Russia-focused companies - including Abramovich’s Evraz and gold and silver producer Polymetal - have recently leapt into the most-bought stocks tables at several of Britain’s largest investment platforms, according to a review of their websites by Reuters.
Evraz stock plummeted 67% prior to its suspension, and Polymetal is down more than 85% since Russia’s invasion began on Feb. 24.
“It’s playing with fire and seems mad to me, but some people want to take aggressive bets. And that will never change,” said Holly Mackay, founder and chief executive of personal finance website Boring Money.
Markets regulator the Financial Conduct Authority told Reuters it was monitoring the situation.
“Investors should take care when investing in companies that may be impacted by the Russian invasion,” the regulator said.
Evraz was one of the top five most bought stocks last week by customers on the AJ Bell, interactive investor (ii) and Hargreaves Lansdown platforms, prior to the stock’s suspension.
It was also the stock with the highest buy-to-sell ratio on the Freetrade platform. All four cater specifically to retail investors, non-professionals who trade securities through online platforms.
The UK has claimed in its sanctions that Evraz has helped provide financial support towards destabilising Ukraine and may have supplied steel used for the production of Russian tanks. Evraz denies the claims.
AJ Bell said Evraz holdings would remain in customer portfolios at the price it was suspended at, while ii said shares were being held until further information was available.
Polymetal was also one of the top 10 most bought stocks last week across the platforms reviewed by Reuters and was top of AJ Bell’s list.
The company is not subject to UK sanctions and its shares are still trading, although the stock was deleted from indexes by FTSE Russell on Monday after many brokers refused to trade its shares. Polymetal, which has eight gold and silver mines in Russia and makes most of its revenues in the country, has said the situation in Ukraine is “horrifying and heartbreaking”, and has called for a peaceful resolution.
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