The value of assets invested in Russia has been almost wiped out. For example, the losses of Finnish mutual fund units are about EUR 600 million. Pension companies, on the other hand, applied for the country even before the war.
Foreign assets in Russia are now completely frozen. The country’s authorities have banned the sale of foreign property. For example, the money of Finnish small investors is stuck several hundred million euros.
When there are no purchases and sales, it is impossible to determine the exact value of the holdings. It is also impossible to get rid of shares and participations. Finnish funds that have invested in Russia will not accept redemptions.
Last year, companies, corporations and households had a total of EUR 1.2 billion in securities receivables in Russia, according to Statistics Finland.
However, it accounts for only less than one percent of all Finns’ securities assets. For comparison: According to the Finnish Investment Survey, the capital of all Finnish mutual funds was over EUR 150 billion in January.
For example, OP’s Russia fund has more than one hundred million euros in Finnish money.
– It is difficult to estimate when trade can take place again. When the stock exchange sometimes opens, foreign investors are likely to be banned from selling, OP’s Director of Asset Management Tuomas Virtala says.
Banks are monitoring the new regulation and interpreting it by taking the names of people on sanctioned lists into their systems.
– We will find out whether we have these people as customers or investors, or whether we have companies on the sanctioned list as investment targets, and we will look at what that means, Virtala says.
The situation also lives on a daily basis in the stockbroking company Nordnet.
– Every day there is new information for investors or new funds will be added to the list whose purchases and sales have been blocked, Nordnet’s Country Manager Finland Suvi Tuppurainen says.
Pension assets withdrawn from Russia
Finland’s largest investors, ie pension companies, now have few holdings in Russia. They have been reduced as a result of Russia’s conquest of Crimea and previous sanctions.
Varma has no direct investments in Russia at all Risto Murron by.
– We have individual indirect holdings through funds. It is typical that some funds also have a small piece of the Russian market, but for our entire portfolio, the share is very, very small, Murto says.
Russia also accounts for a fraction of Ilmarinen’s and Elo’s holdings, or 0.2 per cent. The majority of investments are in Russian government bonds.
Ilmarinen’s receivables from Russia are EUR 130 million.
– We are now completely closed to Russia from our investment universe, ie we no longer invest in Russia at all, Ilmarinen’s Investment Director Mikko Mursula says.
The war on terror has permanently brought economic sanctions into the arsenal of the West, and for twenty years now, large investors have learned to take their potential into account.
– Investors know the risk they are exposed to if they invest in countries that do not comply with international standards, says Risto Murto.
Indirect risks are frightening
The risks of Russia’s attack on pension assets come above all indirectly, ie through the general market situation. As a result of the war, inflation will accelerate, the value of the euro will weaken and commodity prices will rise.
If the entry of Russian gas into Europe is completely cut off due to sanctions, a major crisis may lie ahead.
CEO of Elo Carl Pettersson is concerned about the indirect effects of the war on the economy. Individual companies can face even big problems. He says he is closely following the development of raw material prices.
– Developments in energy and food prices are essential and the way in which they affect inflation. There may be even big risks to Russia for individual companies, Pettersson says.
The big question for pension leaders is how long gas will flow into Central Europe.
“Western sanctions were strong and comprehensive – especially the freezing of the central bank’s foreign exchange reserves – but they are designed to keep gas trading going,” says Risto Murto.
Russia may cut off gas supplies in return. It would have a major impact on both citizens and industry. What the effects would be are currently being investigated by financial market analysts.
– Could it be similar to that of Finnair from the end of overflights in Russia, so far fewer such analyzes have been performed.