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An ETF in Tokyo Looks Like the Last Place to Make Russia Stock Bets

(Bloomberg) — A small ETF listed in Tokyo is grabbing the global spotlight as the ultimate destination for betting on Russian stocks, while products tracking the nation’s wealth following the Ukraine invasion from London to New York suspended has gone.

Nearly $467,000 worth of the Next Funds Russia RTS Linked ETF changed hands Tuesday, according to data compiled by Bloomberg.

The 874 million yen ($7.5 million) exchange-traded fund, which tracks the Russia RTS index of stocks, traded globally after the Six Swiss Exchange closed the iShares MSCI Russia ADR/GDR UCITS ETF (CSRU SW) during trading. Looks like the final product standing on. on Tuesday. The day before, the CSRU traded around $145,000 worth.

Unsurprisingly, there has been a pathetic trend between the volatility of both funds, with 1324 down 37% since February. 16 and the CSRU has declined by almost 90%. CSRU was posting a jump of over 20% when it rallied, while 1324 ended Tuesday with a drop of 17%.

It is unclear how long the Tokyo product issued by Nomura Holdings will continue to trade as investors, money managers and exchanges grapple with the fallout of the Ukraine war. The ETF structure means that funds can typically trade even when their assets may not, but it is generally assumed that some level of liquidity will eventually return. The severity of sanctions on Russia has taken away the prospects of trading the country’s assets in the near future, so many funds are now withheld around the world.

The largest holding in 1324 is the gas producer Gazprom PJSC, whose shares have not been traded in Moscow since the end of February. Its London-listed depository receipts fell 90% last week until they were suspended.

Japan Exchange Group Inc (JPX) did not immediately respond to an email seeking comment outside business hours. A Nomura spokesperson did not immediately respond to a request for comment.

“With the Moscow exchange closed for trading, it may be as close as Russia’s exposure and ETFs, but volatility is expected,” said Rebecca Sin, an analyst at Bloomberg Intelligence. “It can continue to trade as normal until the ETF issuer decides to halt or the market makers provide liquidity.”

CSRU was traded on several exchanges before the SIX move on Tuesday and was halted everywhere. Issuer BlackRock Inc. had stopped creating or redeeming shares in the ETF — effectively stopping money from moving in or out — and the firm had previously said it “strongly supports” places stopping trading. does.

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