The current events in Ukraine led to many economic sanctions against Russia. Despite this war is the result of leaders, not their citizens, the West decided to define many very hard sanctions which resulted into making it impossible to trade with Russian Stocks right now. (After the close of the Moscow Exchange, ADRs listed in the US and GDRs listed on the London Stock Exchange also can’t be bought anymore)
Because many Russian stocks can only be sold right now, the prices for these fell more and more. Speculators who bought some stocks in the beginning of this Week could get these shares very cheap on the few Exchanges and Brokers which still traded them, but now these Speculators also can’t trade Russian stocks anymore.
So in this blog post I want to answer the question if these dramatic price deductions are in any relation to the various results of sanctions in recent human history.
Sanctions against Japan⌗
In the second world war was the ABCD line in which America, Britain, China, and the Dutch stopped selling iron ore, steel and oil to Japan.
However, Japan found a way of producing 80% of the Oil which was imported by themselves.
Sanctions against Iran⌗
Iran is the only country which I know of that has faced similar sanctions like Russia currently. A SWIFT-Ban is nothing new to them.
Kinda similar like Japan, Iran started to produce a lot more of which was imported previously by themselves. This seem to be a good strategy. The Iranian Economy actually grew despite the Sanctions.
One important thing to note here is that western investors don’t have a easy way to invest in Iranian stocks. So if Russia would face a similar evolvement, then the Russian economy could grow in a few years above the previous levels, but maybe western shareholders will see nothing of this because the Sanctions make it impossible to invest.
There is a good article out there from which I quoted:
"Despite their widespread use on the international stage, economic sanctions are largely ineffective in achieving their objectives [...] between 1915 and 2006, comprehensive sanctions were successful, at best, just 30 percent of the time." https://t.co/O5sUbT6VY3— Christoph Miksche (@CMiksche) March 4, 2022
Statistically and by looking at previous examples we can find out that Capitalism and Economy is stronger than political Sanctions. Most countries can grow economically even when the biggest powers in this world don’t like it.
However, for foreign Investors, Sanctions can make it very hard and destroy their investment. E.g. in Russia only a few percent of the population use Credit cards, so the impact on companies like Visa and Mastercard is probably bigger then the worries of most Russians.
So if you look from a foreign Investors perspective, then the question is not if Russia will grow again (thats very likely), it is if your country or the Exchanges you use allow you to invest in Russia - that’s the bigger Issue for you.
I want to note that I am not trying to defend Russia or any other country mentioned here - in all examples there was a good reason to sanction the mentioned countries but from a rational perspective a sanction will most likely improve the local economy so that it is not so vulnerable from outside influences.
This is not investment advice or a buy/sell recommendation. This is my personal opinion and is for information and entertainment purposes only.
Everyone acts independently with their financial decision and bears responsibility for it themselves. Trading in securities is always subject to risks and can lead to total loss or debt (e.g. in the case of warrants). Liability is excluded.