S&P Dow Jones will remove all Russia stocks from its indices
S&P Dow Jones, which manages both the S&P 500 index and the Dow Jones Industrial Average, said Friday it is stripping Russian stocks from its primary equity indices, adding to the financial isolation of the nation after it invaded Ukraine.
The index giant said it will remove Russian stocks listed or domiciled in Russia, including those trading via American depositary receipts, within its standard equity indices before the open of trading on March 9.
S&P Dow Jones said it will also drop Russia from its "emerging market" designation given the "deterioration" in its markets, instead classifying it as "standalone" — which means Russia companies as a whole would have to go through a new assessment at some point to be considered for one of the index company's three country classifications, which are developed, emerging and frontier.
The decision could further drain foreign investment from Russian companies, since the S&P 500 and Dow Jones indices are relied on by many American mutual funds and ETFs to build their portfolios. When a company is removed from one of the indices, it means that those index-based funds will no longer buy shares in that business — typically triggering a decline in its stock price.
The financial impact on Russia from its war on Ukraine has been severe, with Russia's currency tumbling by about one-third earlier this week to less than 1 cent in value following sanctions from the U.S., European Union and United Kingdom.
The decision from S&P Dow Jones comes after other financial institutions have blocked Russia and Russian companies from accessing markets. For instance, the London Stock Exchange this week suspended trading in Russian stocks, Reuters reported.
S&P Dow Jones said it will continue to calculate and publish some Russian-specific indices, although it noted that they may include securities that are ineligible for American, British and EU citizens to invest in. Those indices include the Dow Jones Russia Index and the S&P Russia BMI.
Since February 24, when Russia attacked Ukraine, the Dow Jones Russia Index has plunged 95% and the S&P Russia BMI is down 41%.