Shortly after Putin began his invasion on Ukraine, markets across the world took a blunder. Multiple stock indexes fell several percentage points—the S&P500 hit its fourth consecutive “red day” before last weekend with the Dow Jones and other technology markets following suit. However, these market corrections are nothing compared to what’s happened to Russian markets onset by an unhinged Putin. Global sanctions, Russian asset freezing, and other economic strategies have opened the door for a Russian economic collapse some speculate.
Shortly after Putin announced his “special military operation” the Moscow Exchange halted trading as Russian stocks fell below projected levels. Such was an attempt to prevent further valuation declines. One of the biggest Russian indexes, the MOEX, fell by over 50%. The Russian ruble has dropped by almost 30% as of this trading week.
Russian bank stocks took a turn for the worst as well. The stock of Russia’s largest bank, Sberbank of Russia, fell over 65%. The stock is on track to close the month at levels not seen since 2017. The bank shutdown trading of the stock, though it’s valuation has continued in free-fall on London Exchange markets.
Now, Russian citizens are running to the nearest banks in attempts to withdrawal their funds, known as a “bank-run”. Reports surfaced that the Russian bank has said in a statement “[the bank] has the necessary resources and tools to maintain financial stability and ensure the operational continuity of the financial sector“. But the bank was forced to allocate more currency to ATMs to keep-up with citizen withdrawals.
It seems that Putin is pinned between a surprisingly strong Ukrainian militia (who have killed over 4,500 Russian soldiers), international sanctions preventing access to liquidity, and an impending economic meltdown in his home front. Russian citizens have also begun to protest the invasion—in which, the citizens were promptly arrested by police.
Not only is Putin an embodiment of irrationality evident by the recent invasion on Ukraine, he’s an unwise risk—to—reward strategist. Indeed, Ukraine is a natural resource hub that booms with minerals, natural gas, and petroleum. Though it turns out the Russian economy may have their wherewithal—the funds—to advance on a NATO country and seize those resources.
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