While Russia has been largely ignored by the West’s major investors in recent weeks, a small number of armchair investors still see a deal and are willing to overlook any ethical concerns. While many Brits are donating money to charities in support of Ukraine’s invasion by Russia, others are trying to make a profit on social media and are offering tips to “buy a dip”.
“For me, it is a once in a lifetime chance to buy,” said an investor on March 4 about Russian-focused steel and mining company Evraz.
Six days later, Evraz’s London-listed shares were suspended. This was after Roman Abramovich, the UK’s largest shareholder, was sanctioned. Investors who placed a bet on the stock would have their money frozen.
Despite the risks of Russia-focused investments, they have been popular among retail investors, even though the war has taken a heavy toll on the human population.
Russia, which called its actions “special operations”, launched missiles at a Lviv airport on Friday. This is a city where thousands of refugees have fled to Ukraine’s battlefields.
While major investors consider Russia uninvestable, DIY investors, many of whom took up stock picking during the “stonks”, trading frenzy in the pandemic, have not been deterred.
According to Reuters, London-listed Russian-focused stocks – including Evraz of Abramovich and Polymetal – have recently risen into the top-bought stocks tables on several of Britain’s largest investment platforms.
Evraz stock plunged 67% before its suspension and Polymetal has fallen more than 85% ever since Russia invaded on February 24.
“It’s playing in fire and seems crazy to me, but some people are willing to make aggressive bets. Holly Mackay, chief executive officer of Boring Money’s personal finance website, said that this will not change.
Financial Conduct Authority, the market regulator, told Reuters that it was closely monitoring the situation.
The regulator stated that investors should be cautious when investing in companies that could be affected by the Russian invasion.
Evraz was among the five most purchased stocks by customers last week on the AJ Bell, interactive investor(ii), and Hargreaves Lansdown platforms. This was before the stock was suspended.
It also had the highest buy-to-sell ratio on the Freetrade platform. These four stocks are primarily for retail investors who trade securities online.
In its sanctions, the UK claimed that Evraz had helped to destabilize Ukraine financially and may have supplied steel for the construction of Russian tanks. Evraz refutes the claims.
AJ Bell stated that Evraz holdings will remain in customer portfolios at their suspended price, while ii stated that shares are being held until more information is available.
Polymetal was also among the top 10 stocks that were bought last week on all platforms, according to Reuters. It was also top of AJ Bell’s list.
The shares of the company are not affected by UK sanctions. However, FTSE Russell removed it from its indexes on Monday after brokers refused to trade its shares.
Polymetal, which owns eight silver and gold mines in Russia, makes the majority of its revenue in Russia. It has called for a peaceful solution to the crisis in Ukraine.
MAKE YOUR OWN DECISIONS
As more platforms offer commission-free trading, retail investors have been a more prominent force in the market. Stock-pickers are also more vocal on social media.
Online platforms are growing rapidly in Britain’s consumer investment market. New investors are more likely to be younger and first-time investors.
Mackay suggested that platforms might need to provide more warnings and ethical filters than more experienced investors in the Ukraine crisis. However, she cautioned against being too strict.
In the past, regulators have warned about risks for retail investors. This was especially after the suspension of British property fund funds in the wake of the Brexit vote in 2016, and COVID-19 lockdowns 2020. Also, with the suspension and subsequent collapse Neil Woodford’s flagship fund, 2019.
Hargreaves Lansdown said that AJ Bell and Hargreaves Lansdown primarily offered a platform for customers who wanted to invest in their own way, taking into consideration their ethical beliefs.
Hargreaves Lansdown spokesperson said that “our role is to inform clients so they can make their own decision.” Hargreaves Lansdown also stated that the company was “horrified” by the human tragedy and was working with regulators.
Freetrade stated that it closely monitored the situation and liaised regularly with regulators to inform customers about the risks associated with investing in Russian-linked stock.
Abrdn bought ii in December. It stated that the Russia-linked trades were not typical of an investor and added that it was developing ethical filters for assets. However, these filters were not Russia-specific.
A spokesperson for ii stated that “there will always be those who choose to lean heavily on extreme volatility.” “It’s been the case for a long time, and we don’t have any authority to change it.”