A strange calm has descended on the country's financial markets almost two months after Russia invaded Ukraine.
Russia's ruble has fully recovered from its crash after the attack. The country's stocks are in negative territory for the year, but the sell-offs seen in February are over.
Under the surface, you can see the strong arm of the Russian state holding the markets together. The government has introduced strict capital controls that have boosted the ruble.
ITI Capital is a major financial broker in Russia. He has worked in financial markets for 15 years, including at Sberbank. He spoke to Insider this week about what is going on in Russia.
The unfortunate reality doesn't reflect stocks.
The Moex stock index has fallen roughly 40% so far this year, but has risen 9% since bottoming out.
The Russian equity market doesn't reflect reality according to Lutsko.
foreigners owned 80% of the Moscow exchange's tradable stocks in 2021, worth $200 billion.
According to our estimates, at least $50 billion of equity exposure is still on funds.
A wave of selling could follow a recent ruling by Moscow that told Russian companies to stop listing their shares abroad.
According to our estimates, there is at least 900 billion rubles worth of depositary receipts abroad of Russian stocks that could be sold by local investors on Moex.
The lack of foreign players in the market has made it harder to buy and sell assets. The Moscow broker says retail investors have little understanding and idea how to play the market.
They are going to play.
The situation is worse in the bond market. Russia's government and many of its biggest companies are on the verge of default on their foreign debts because of US sanctions. Bonds in big companies have fallen.
Bargain hunters are hoping for a rebound in prices if the Ukraine picture improves. Although he avoids the term, such investors are referred to asvultures.
Many moderate sized hedge funds and even many local brokers are looking for opportunities to buy Russian eurobonds.
The ITI entity in Guernsey has been facilitating these trades, buying bonds at 20-30% of their face value.
The ruble is completely artificial.
The rapid rebound in the Russian ruble caused some analysts to ask if Western sanctions were having the desired effect.
It is not a reflection of the strength of the economy. The government has imposed capital controls that prevent the ruble from leaving the country, and has instructed exporters to convert 80% of their foreign earnings into the currency.
The ruble is regulated by the central bank, which makes sure that volatility remains limited.
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