Russian stocks tumble as U.S. imposes sanctions

Will Rusal default on some liabilities due to new sanctions?

Russia's broader market also sank, with the main blue-chip index trading 9.6 per cent lower, as major companies such as Sberbank and Norilsk Nickel fell sharply despite not being affected by the sanctions, which also hit six other oligarchs and 17 government officials.

The sanctions freeze any assets that those targeted have in United States jurisdictions and bar Americans from doing business with them.

'The Russian government operates for the disproportionate benefit of oligarchs and government elites, ' said Treasury secretary Steven Mnuchin.

The entrance to a Moscow business centre that houses the offices of the aluminium giant Rusal, one of the companies controlled by the Russian billionaire Oleg Deripaska.

Prices of the metal, vital in the aircraft manufacturing and auto industries, jumped as traders protected themselves against the chance that United Company Rusal - the biggest aluminium maker outside China - will be prevented from supplying the global commodity market.

Separately, Rusal warned that the sanctions impact "may result in technical defaults in relation to certain credit obligations of the group, and the company is now evaluating the impact (if any) of such technical defaults on the financial position of the group".


Rusal said it is evaluating the possible impact to its financial position, and that the publishing of its annual report for the year to December may be delayed.

Rusal and seven other companies linked to Deripaska were the main targets when the U.S. imposed sanctions created to punish Vladimir Putin's inner circle for "malign activity", including support for Bashar al-Assad's government in Syria and interfering with the USA election in 2016.

Rusal is the second-largest aluminum maker in the world, while the U.S. is the largest importer of aluminium.

EN+, another company owned by Deripaska, plunged 25 percent on the London bourse, the BBC reported.

The Kremlin on Monday slammed the latest round of sanctions. Polymetal, a Russian miner listed in London, was the biggest FTSE 250 faller, down 18%. "The situation is pretty egregious from the point of view of legality, it tramples on all kinds of norms, and so a thorough analysis is necessary", he said. It said further evaluations were being carried out to assess the impact of the sanctions.

En+ Group and Rusal both released statements on Monday that said "it is highly likely" that the sanctions would "be materially adverse" to their businesses.

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