03-02-2022, 09:52 AM
Why are Russian ADRs falling so much?
<!-- SC_OFF --><div class="md"><p><strong>Please keep this factual rather than ethical. I am curious about the market dynamics only.</strong></p> <p>I'm struggling to understand the reasons behind the total collapse of the Russian equities market. It was trading at a substantial discount before, but now it's truly unbelievable with many ADRs trading below a PE ratio of 1. I understand that Russia is being cut of from SWIFT and all, but ultimately many of these are companies that will be fine even without European trade for a few years.</p> <p>I see this as a result of four main factors:</p> <p>- Risk of companies going bankrupt or being diluted to the point of positions being worthless- Risk of nationalization of stocks, or government interference causing stocks to lose value- Risk of ADRs becoming untradable and somehow as a result becoming worthless- Devaluation as (institutional) investors divest from Russia</p> <p>I'm curious to hear your opinions on how much each of these play a part. It is fascinating to see the total collapse of a market like this, and I'm struggling to understand how companies with rock solid balance sheets and stable incomes can be punished so hard that in many cases they seemingly price in a >80-90% chance of the stock being worthless.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Prevailing"> /u/Prevailing </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/t4o6tu/why_are_russian_adrs_falling_so_much/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/t4o6tu/why_are_russian_adrs_falling_so_much/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p><strong>Please keep this factual rather than ethical. I am curious about the market dynamics only.</strong></p> <p>I'm struggling to understand the reasons behind the total collapse of the Russian equities market. It was trading at a substantial discount before, but now it's truly unbelievable with many ADRs trading below a PE ratio of 1. I understand that Russia is being cut of from SWIFT and all, but ultimately many of these are companies that will be fine even without European trade for a few years.</p> <p>I see this as a result of four main factors:</p> <p>- Risk of companies going bankrupt or being diluted to the point of positions being worthless- Risk of nationalization of stocks, or government interference causing stocks to lose value- Risk of ADRs becoming untradable and somehow as a result becoming worthless- Devaluation as (institutional) investors divest from Russia</p> <p>I'm curious to hear your opinions on how much each of these play a part. It is fascinating to see the total collapse of a market like this, and I'm struggling to understand how companies with rock solid balance sheets and stable incomes can be punished so hard that in many cases they seemingly price in a >80-90% chance of the stock being worthless.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Prevailing"> /u/Prevailing </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/t4o6tu/why_are_russian_adrs_falling_so_much/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/t4o6tu/why_are_russian_adrs_falling_so_much/">[comments]</a></span>Kind Regards R