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Russian firms on brink as United States sanctions cause panic

11 April 2018

Rusal is controlled by Russian oligarch Oleg Deripaska, a close friend of President Vladimir Putin.

Shares in Rusal, the world's second-biggest aluminum producer, were 1 percent higher in Moscow after losing more than 34 percent of their value in two trading days.

Shares of United Company Rusal Plc fell 40 percent in Hong Kong on Monday after it was included in the new list.

Jasper Lawler, head of research at London Capital Group, added: "The sanctions make it nearly impossible for these Russian firms and their billionaire owners to transact in United States dollars, the main currency used in global trade and the standard denomination for commodities". By making it virtually impossible for Deripaska's businesses to trade in USA dollars, the measures threaten the empire of one of Putin's closest allies.

The US said however that Friday's action was taken under a law passed to punish Russian Federation for its alleged bid to interfere in the 2016 US presidential vote, as well as its intervention in conflicts in Syria and Ukraine.

The Kremlin on Monday slammed the latest round of sanctions.

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In a sea of red for Russian stocks Evraz, the FTSE 100 mining group part-owned by Roman Abramovich, fell 14 per cent and Polymetal, the FTSE 250 miner, closed down 18 per cent. Polymetal, a Russian miner listed in London, was the biggest FTSE 250 faller, down 18%.

Deripaska's companies have seen other resignations by non-Russian board members since the sanctions, with his newly-created holding company En+ Group saying board directors Dominique Fraisse and Zhao Guangming had quit on April 6 and 9 respectively.

Prime Minister Dmitry Medvedev said Moscow was looking at how to support the companies and sectors that have been hit.

The sanctions were weighing on broader markets in Russian Federation.

Rusal, which produces about 7% of the world's aluminium, said it regretted its inclusion on the new USA sanctions list.

Russian firms on brink as United States sanctions cause panic