Three public companies on US blacklist: opening Pandora’s Box or a one-off event?


The US has added several Russian entities and individuals to its sanctions list, causing a market sell-off. Among blacklisted companies are three public ones: Rusal, the alumina producer, En+, the holding company, and carmaker GAS, which are indeed controlled by Oleg Deripaska. US Treasury imposed ban on ownership of any equity and debt instruments issued by these three companies. Thus, investors might have feared the alike measures to be taken against other public Russian companies.

We do not expect similar restrictions to be imposed on the broad Russian equity market, so we consider the current market drop an overreaction:

  • The Deripaska case stands out as he was suspected by US law enforcement and government agencies to have been involved in US elections meddling on the behalf of the Russian government
  • The imposition of market-wide restrictions would be even more harmful for US asset management businesses than sanctions involving Russian sovereign debt, which were not imposed after the US authorities decided that such action could materially backfire on US investors
  • We consider the Ukrainian and Crimea crisis a more serious reason to impose sanctions than US elections meddling, which has been surrounded by questions.