Sanctions propel Russia towards Asia
Sanctions overs the conflict in Ukraine have closed off western capital markets to some Russian companies, giving Asia an opportunity to take a greater role. But an easy ride in the east is not guaranteed.
Russia’s embrace of international capital markets since the end of the Cold War has at times been hard to believe. A country previously pitted so aggressively against capitalism has seen companies across its economy venture out into the world for stock listings, bond deals and acquisitions, signaling its enthusiasm for red-blooded dealmaking.
Western capitals such as London and New York have profited handsomely from the Russian gold rush, providing the investment banking infrastructure needed to raise funds and give advice to rapidly growing companies from the former communist state.
The latest sanctions package from the European Union came at the end of July and restricted Russia’s access to the bloc’s capital markets. The measures prevent EU nationals and companies from buying or selling 'new bonds, equity or similar financial instruments with a maturity exceeding 90 days, issued by major state-owned Russian banks, development banks, their subsidiaries outside the EU and those acting on their behalf’. The US Treasury imposed sanctions alongside that 'prohibit US persons from providing new financing to three major Russian financial institutions, limiting their access to US capital markets’.
This sudden frost has prompted renewed interest in Asia.