a board with the logo is on display outside the office of the moscow exchange in the capital city of moscow russia march 24 2022 reutersmaxim shemetov moscow aug 5 reuters  russian stocks are expected to decline in august as investors from socalled friendly countries a fraction of foreign investment power return to the unchartered waters of an equity market now offering huge risks and insufficient transparency foreign investors have not had access to the russian stock market since feb 25 the day after president vladimir putin sent troops into ukraine triggering sweeping western sanctions aimed at isolating russia and countermeasures from moscow on aug 8 moscow exchange moexmm will let clients from friendly jurisdictions those which have not deployed sanctions against russia and investors whose ultimate benficiaries are russian trade on its stock and derivatives markets banks and brokerages will need to identify their clients home country when registering them with russias largest bourse a spokeswoman for moscow exchange said the number of friendly investors was unknown as they have yet to be registered first but their admission should gradually increase market liquidity there is no timeline for opening the door to investors from unfriendly countries she said the stock market is likely to take a bearish trend on monday due to the high probability of nonresidents ditching the blue chips said andrey eshkinin an analyst at alor brokerage their return will create a supply overhang in the short term and could lead to a decline in share prices said natalya malykh head of equities research at finam brokerage but the depth of the highly volatile market decline could be limited as the share of nonresidents from friendly jurisdictions was just 1 of the russian stock market compared with the 74 share now controlled by russian retail investors the roublebased benchmark moex imoex has lost 44 of its value so far this year and is 15 below levels when foreigners last traded on moscow exchange in february foreign investors return is a sign of market normalisation and will boost liquidity experts say but the timing is alarming august is known in russia for black swans or unexpected events such as the 1998 domestic debt default or a war with georgia in 2008 there is even a wikipedia page called august curse august is a traditional time of upheaval for russian assets said iskander lutsko chief investment strategist at iti capital who expects the moex index to fall by around 15 in the coming weeks also pressured by the conversion of depositary receipts depositary receipts gdrs of russiancompanies that were traded on foreign exchanges and held in russian depositories will be automatically converted into shares on moscow exchange from aug 15 in a bid to reduce foreigners control over these companies amid western sanctions this can create an additional overhang of the supply of such securities on the market said aleksei potapov investment director at ufg wealth management in moscow the conversion could lead to selling of up to 18 billion worth of converted shares in august but a 5 daily limit set for selling of such shares by the central bank will smooth out the impact of the selloff itis lutsko said once the dust from the selloff settles the russian stock market can return to gains analysts said foreigners who bet on russias economic recovery could be interested in holding its stocks analysts at moscow credit bank said in the longer term the russian stock market looks extremely cheap and attractive for purchases with all the risks associated with it said potapov