In a significant move, Russian President Vladimir Putin has authorized a select group of Western asset managers and hedge funds to divest Russian securities that had been frozen since Russia’s invasion of Ukraine. This decision comes just one day before a scheduled conversation between Putin and U.S. President Donald Trump regarding a potential 30-day ceasefire.
Western Investors Gain Rare Approval
According to a presidential decree published on Monday, firms such as Jane Street, GMO, and Franklin Templeton have been granted permission to sell shares in Russian companies. These securities will be purchased by 683 Capital Partners, a U.S.-based hedge fund. The decree further states that 683 Capital Partners will be able to conduct transactions with two Russian investment funds without requiring further authorization from the Kremlin.
New York-based 683 Capital Partners, managed by Ari Zweiman, had $1.6 billion in assets under management at the end of 2024, per filings with the U.S. Securities and Exchange Commission. The firm has not provided immediate comment regarding the decree.
The History of Restrictions on Foreign Investments in Russia
Following the full-scale invasion of Ukraine in 2022, Putin implemented strict controls on foreign investments, effectively banning international investors from trading shares or bonds of Russian banks and energy companies without explicit governmental approval. Companies such as Norilsk Nickel, VTB Bank, and Rosneft have seen their foreign-owned stocks largely written off as worthless due to these restrictions and the resulting sanctions.
The Financial Times notes that Western exchanges suspended trading of Russian securities in 2022, which shifted transactions into over-the-counter markets. Meanwhile, Russia classified funds and securities belonging to non-residents from “unfriendly” nations into so-called C accounts, blocking access to more than 500 billion rubles ($6.4 billion at the time) as of March 2023. The Russian Central Bank has since ceased disclosing the total amounts held in these accounts.
Geopolitical Implications of Putin’s Move
The timing of this decree is particularly noteworthy, as it coincides with ongoing diplomatic efforts led by the United States to negotiate a temporary ceasefire in Ukraine. The Kremlin has confirmed that Putin and Trump are expected to discuss the matter by phone on Tuesday, while U.S. and Russian representatives are reportedly engaging in negotiations on business matters, including in the gas sector.
Bloomberg highlights that Western investors, in addition to securing Kremlin approval, typically seek clearance from their respective home regulators before exiting Russian assets. However, it remains unclear whether the firms mentioned in the decree have obtained such permissions.
Russian Market Response and Economic Impacts
The Russian ruble has appreciated by 36% against the U.S. dollar in 2024, with Russian stocks also experiencing a surge. Investors speculate that the United States may soon relax its sanctions on Russia, which have largely isolated Moscow from Western financial markets. These sanctions have hindered international funds from freely buying or selling Russian assets.
This latest decree represents a calculated shift in Russia’s approach to foreign investment, potentially signaling a willingness to re-engage with global financial markets under carefully controlled conditions. However, with Western sanctions still firmly in place and diplomatic tensions remaining high, the broader impact of this policy remains uncertain.
