Russia Back in Investors’ Focus after Weekend Mutiny

Private military company (PMC) Wagner Group servicemen prepare to leave downtown Rostov-on-Don, southern Russia, 24 June 2023. (EPA)
Private military company (PMC) Wagner Group servicemen prepare to leave downtown Rostov-on-Don, southern Russia, 24 June 2023. (EPA)
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Russia Back in Investors’ Focus after Weekend Mutiny

Private military company (PMC) Wagner Group servicemen prepare to leave downtown Rostov-on-Don, southern Russia, 24 June 2023. (EPA)
Private military company (PMC) Wagner Group servicemen prepare to leave downtown Rostov-on-Don, southern Russia, 24 June 2023. (EPA)

Some investors were watching for ripple effects from an aborted mutiny in Russia on Saturday, expecting a move into safe havens such as US government bonds and the dollar when markets open later on Sunday.

Heavily armed Russian mercenaries led by Yevgeny Prigozhin, a former ally of President Vladimir Putin and founder of the Wagner army, advanced most of the way to Moscow after capturing the city of Rostov, but then halted their approach, de-escalating a major challenge.

On Saturday night, they began withdrawing from the Rostov military headquarters they had seized, a Reuters witness said.

Financial markets have often been volatile since Russia invaded Ukraine in February 2022, which caused ruptures in markets and through global finance as banks and investors rushed to unwind exposure.

After Saturday's events, some investors said they were focused on the potential impact to safe-haven assets such as US Treasuries and on commodities prices, as Russia is a major energy supplier.

"It certainly remains to be seen what happens in the next day or two, but if there remains uncertainty about leadership in Russia, investors may flock to safe havens," said Gennadiy Goldberg, head of US rates strategy at TD Securities in New York.

Goldberg said that despite the de-escalation, "investors may remain nervous about subsequent instability, and could remain cautious."

The action sparked attention globally, and revived an old fear in Washington about what happens to Russia's nuclear stockpile in the event of domestic upheaval.

"Markets typically do not respond well to events that are unfolding and are uncertain," particularly relating to Putin and Russia, said Quincy Krosby, chief global strategist at LPL Financial.

"If the uncertainty escalates, you're going to see Treasuries get a bid, gold will get a bid and the Japanese yen tends to gain in situations like this," Krosby said, mentioning typical safe-haven assets that investors buy when risks rise.

Alastair Winter, Global Investment Strategist at Argyll Europe said that while the de-escalation meant markets may now not react much, "Putin has clearly been weakened and there will be more developments."

He saw the US dollar finding "some support as the market returns to speculating over rate hikes and cuts and recession in different economies."

Stocks have been on a mostly upward path in recent months, which some said could make them more vulnerable to a selloff. Year-to-date the S&P 500 is up 13%, although it has lost steam in recent days with interest rates in focus. Federal Reserve Chairman Jerome Powell gave testimony last week in which he signaled more interest rate hikes ahead.

Some saw little reaction as the situation seemed defused. Rich Steinberg, chief market strategist at the Colony Group in Boca Raton, Florida, said that "markets will kind of treat this as another geopolitical risk" and "some frayed nerves were calmed in the short run" by the de-escalation.



Derayah Financial Joins Flurry of Saudi Firms Seeking a Listing

Derayah Financial Joins Flurry of Saudi Firms Seeking a Listing
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Derayah Financial Joins Flurry of Saudi Firms Seeking a Listing

Derayah Financial Joins Flurry of Saudi Firms Seeking a Listing

Saudi Arabia's Derayah Financial became the first firm to announce plans this year to float on Riyadh's main market, after it said on Thursday it was offering investors a 20% stake via an initial public offering (IPO).
The company is planning to sell 49.94 million existing shares in the IPO, it said in an intention to float document, adding the price for the offering will be determined at the end of a book-building period, without providing further details, Reuters said.
"I am excited to welcome new shareholders to join us on this journey as we continue to drive innovation, create value, and contribute to the Kingdom's ambitious economic transformation," co-founder and chairman Taha AlKuwaiz said in the document.
Founded in 2009, Derayah provides brokerage and trading services, as well as asset and wealth management solutions, with 15.1 billion riyals ($4.03 billion) in assets under management as of the end of June.
The possible listing is part of a flurry of IPOs in the Gulf driven in part by local governments' economic diversification strategy and listings by private groups and family businesses.
Saudi Arabia's red-hot IPO market saw a number of financial services firms including Rasan Information Technology and Yaqeen Capital make their market debut last year.
Others like the investment banking arm of one of the Kingdom's biggest lenders, Riyad Bank, could follow suit this year.
Derayah posted a net profit of 228 million riyals ($60.80 million) in the first half of 2024, up 70% from the same period a year earlier, it said on Thursday.
It appointed HSBC Saudi Arabia as sole financial adviser, bookrunner, global coordinator, lead manager and underwriter for the IPO.