Industry Updates

HSBC AM and FinEx halt creations of Russia ETFs

Follows moves by BlackRock, Invesco and DWS

Theo Andrew

a red and white ball in a net

HSBC Asset Management and FinEx Capital have become the latest issuers to suspend primary market trading on their Russia ETFs.

Effective 2 March, HSBC AM said it would suspend the issue and redemption of shares on the HSBC MSCI Russia Capped UCITS ETF (HRUB) as the Moscow Exchange continues to remain closed.

Furthermore, FinEx announced it would be taking the same measures on its FinEx Tradable Russian Corporate Bond UCITS ETF (FXRU).

Both ETFs will also see their net asset value (NAV) suspended while trading will continue on the secondary market. HRUB is currently trading at a 6.3% discount to its NAV.

HSBC AM said the decision was made due to the escalating conflict in Ukraine and the impact the West’s sanctions were having on the Russian economy, severely impacting the liquidity of the country’s stock market.

In a market announcement, it said: “The decision to impose the suspension has been made in the best interest of shareholders due to events beyond the control, responsibility and power of the directors that do not allow the disposal and valuation of investments for the time being comprised in the fund without prejudicing the interests of shareholders.

FinEx added the board made the decision due to the ETFs exposure to Russian corporate bonds, the Russian Rouble and Russian Rouble FX contracts.

Prior to its suspension, HRUB had already experienced two non-dealing days earlier this week, allowing its NAV to be published while suspending trading on the primary markets.

BlackRock, Invesco and DWS announced they would be suspending primary trading on their standalone Russia ETFs while the former added it would take the same action on its iShares MSCI Eastern Europe Capped UCITS ETF (IEER).

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