Dividends and Moscow introduces temporary curbs to halt investor exodus

When a country goes to war, it has to ensure the people who live in the non evading country attempt to go about their normal lives. Russia troops moved to the Ukraine, but in the rest of the country – the regular things that need to be done are continued. The garbage is picked up, the water works, groceries are bought, children go to school and parents go to work. The idea for the country in this case, Russia, to tell the people the normal things need to be done, while the members of the military sacrifice for the greater good of the country. When the war is over, something better will be the outcome. (whether it is, is always debatable)

In an article by Carolyn Cohn and Lawrence White of Reuters, when Russia invaded the Ukraine, the stock market fell, the Russia ruble (their currency) fell and the government put a restriction on Russia people taking all of their money out of the bank. For the large institutional players, the Russian government is trying to ensure they do not sell assets and take the money out of Russia. This means billions of dollars worth of securities held by foreigners in Russia are at risk of being trapped.

If you think about the S&P 500 index funds we can invest in New York, the Russia stock markets have similar index funds and millions of people own them.

In a matter of weeks, Russia has turned from a lucrative bet on surging oil prices to an uninvestable market with a central bank hamstrung by sanctions, major banks shut out of global payments system SWIFT and capital controls choking off money flows. The west is hoping not to send troops but make life very hard for the mythical average Russia.

Linking to dividend paying stocks, on one level as an investor you are thinking it is very good the west is using financial measures against Russia for in the past there was a limited price to be paid by the country. Perhaps these measures will be the new normal and leaders of the countries will need to think twice before they act. As an investor once the war is over and the financial controls come off, the assets of Russia will be low and with high oil prices money can be made.

There are more questions than answers, till the next time – to raising questions.

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