Russia will ban Western companies from exiting investments as BP and others dash for the door
Russia has said it will temporarily block foreign companies from exiting investments in the country.
BP, Shell and other major companies have said they'll cut ties to Russia over the war in Ukraine.
Russia's ban adds to the difficulties for foreign investors, who are scrambling to work out what effect Western sanctions will have.
Russia plans to temporarily block Western companies from exiting their investments in the country, as the government steps up the defense of its troubled economy and BP and others scramble to cut ties there.
Prime Minister Mikhail Mishustin told a government meeting Tuesday that Moscow is preparing a presidential decree that would temporarily limit the ability of foreign investors to sell Russian assets.
The move came after the US and its allies imposed tough new sanctions on Russia's banks and central bank that have piled the pressure on the country's financial system and on Western companies with Russian links.
"In the current situation of sanctions, foreign entrepreneurs are forced to work based, not on economic concerns, but under political pressure," Mishustin said, according to Bloomberg's translation. He did not provide further details on the temporary ban.
Western companies have rushed for the exit after Russia invaded Ukraine last Thursday, unleashing what could become Europe's bloodiest war since 1945.
BP is set to sell its almost 20% stake in oil exploration company Rosneft, potentially racking up a $25 billion loss. Fellow oil giant Shell and Norwegian state energy company Equinor have also said they'll exit joint ventures in Russia. France's TotalEnergies said it would no longer provide capital for new projects in Russia, according to a tweet from chief executive Patrick Pouyanne. It was unclear what effect the Russian move would have on the companies as of Tuesday morning.
Major financial index provider MSCI said it's considering cutting Russian assets from its benchmark indices, which could cut the amount of investment in the country.
Read more: A Wall Street veteran weighs in on why escalating Russia-Ukraine tensions are unlikely to delay the Fed's hawkish campaign to raise rates — and shares 3 commodity-based strategies to leverage in this environment
Russia's plans to temporarily block the selling of assets further complicates the picture for investors, however.
The decision by the US and its allies to cut certain Russian banks off from the SWIFT global payments messaging system had already raised concerns that it would be very difficult to sell domestic assets.
On top of that, the Moscow stock exchange has been shut for Monday and Tuesday as authorities try to limit financial damage. The country's stock market plunged as much as 50% in a day last week.
London-listed Russian assets have been pulverized in recent days. Russia's biggest bank, Sberbank, fell as much as 77% Monday in London and was down more than 94% since the start of the year as of Tuesday. Energy company Gazprom's London shares were down more than 70% over the same period.
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