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In less than a week, Russian assets have become practically untouchable for Western investors, who see no reason to expose themselves to a pariah economy that could be crushed by sanctions. Financial transactions also look increasingly difficult to execute and risk running afoul of regulators.

“It’s very difficult to see any scenario right now where buying Russian assets makes sense,” David Coombs, head of multi-asset investments at Rathbones, told me. All bets, he added, would be a “pure gamble.”

Over the weekend, Western governments dramatically ramped up pressure on Russia following its invasion of Ukraine. The United States, the European Union, the United Kingdom and Canada said they would expel some Russian banks from SWIFT, a global financial messaging service, and “paralyze” the assets of Russia’s central bank.

Following the news, BP announced Sunday that it would exit its nearly 20% stake in Russian state oil company Rosneft, describing Moscow’s decision to attack its neighbor as “an act of aggression which is having tragic consequences across the region.”

Shares of BP (BP) plunged 7% in London on Monday. Santander analyst Jason Kenney thinks the company could take a hit of more than $26 billion as it walks away from its business in the country.

The move could compel other companies with similar investments to follow suit. Shares of France’s TotalEnergies, which has a large stake in Russian gas producer Novatek, were 5% lower in early trading.

“BP has clearly forced that issue,” Coombs said.

Norway’s $1.3 trillion sovereign wealth fund, which is the largest in the world, will also divest its Russian assets, the country’s prime minister said Sunday. And Norwegian energy company Equinor said Monday that it would halt new investments into Russia and begin the process of ditching its joint ventures in the country.

Finding buyers for Russian stocks and bonds could be a Herculean task in the current climate.

The financial case for investing in the country is poor. S&P lowered Russia’s credit rating to “junk” on Friday. Economic conditions have deteriorated since then. The most recent round of financial penalties “will be devastating,” tweeted Sony Kapoor, CEO of the Nordic Institute for Finance, Technology and Sustainability.

The firms that act as plumbing for the global financial system are also racing to ensure they comply with the new sanctions, erecting barriers to executing and settling trades of Russian assets in the near-term.

“It will be very difficult to sell your Russian shares today and get them converted back to your base currency and get them home,” Coombs said.

Additionally, there have been growing demands on asset managers to consider the ethics of their investments, and to make sure their portfolios are in line with environmental, social and governance, or ESG, standards.

It would be tough to claim that Russian assets fit ESG criteria, Timothy Ash, a senior sovereign strategist at BlueBay Asset Management, told me.

“[Russian President Vladimir] Putin has made it very, very difficult to invest in Russia now for a long time to come,” Ash said.

Russia faces financial meltdown as sanctions slam economy

Russia was scrambling to prevent financial meltdown Monday as its economy was slammed by a broadside of crushing Western sanctions imposed over the weekend in response to the invasion of Ukraine.

The latest: Putin was due to hold crisis talks with his top economic advisers after the ruble crashed to a record low against the US dollar. The central bank more than doubled interest rates, and the Moscow stock exchange was shuttered for the day.

The European subsidiary of Russia’s biggest bank was on the brink of collapse as savers rushed to withdraw their deposits. And economists warned that the Russian economy could shrink by 5%.

“The ratcheting up of Western sanctions over the weekend has left Russian banks on the edge of crisis,” Liam Peach, an emerging market economist at Capital Economics, said in a note to clients on Monday.

Putin’s government has spent the past eight years preparing Russia for tough sanctions by building up $630 billion in international reserves including currencies and gold, but his “fortress” economy is now under unprecedented assault and at least some of that financial firepower is frozen.

“We will … ban the transactions of Russia’s central bank and freeze all its assets, to prevent it from financing Putin’s war,” European Commission President Ursula von der Leyen said in a statement Sunday.

The ruble lost about 13% of its value to trade at 94 to the dollar at 7:50 a.m. ET after earlier plummeting as much as 40%. The start of trading on the Russian stock market was delayed, and then canceled entirely, according to a statement from the country’s central bank.

The collapse in the currency prompted the Russian central bank to implement emergency measures on Monday, including a huge hike in interest rates to 20% from 9.5%.

“External conditions for the Russian economy have drastically changed,” the bank said in the statement.

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