On Wednesday I examined Evraz (LSE: EVR), eyeing up the possible long-term attractions of the low Evraz share price. The Russia-based steel producer claimed to be operating as normal, despite the effects of the Russian invasion of Ukraine.
But no sooner had my words been published than the London Stock Exchange suspended trading in Evraz shares. The reason? It’s all about Roman Abramovich.
Until Wednesday, Evraz maintained that for the purposes of sanctions regulations, it “does not consider itself to be an entity owned by, or acting on behalf or at the direction of, any persons connected with Russia and thereby caught by such legislation.” And the Evraz share price was steadying a little.
The company did admit that it could not be certain whether Mr Abramovich, along with several other major Russian shareholders, would be legally considered connected with Russia in terms of those new sanctions laws.
Abramovich sanctions
The UK government has now clarified that uncertainty.
Mr Abramovich has had assets frozen and is subject to travel bans. And a subsequent run on the Evraz share price led to the temporary suspension, by the Financial Conduct Authority, of Evraz share trading.
For its part, Evraz has reiterated that it “does not consider Mr Roman Abramovich as a person exercising the effective control of the company“.
With the market in Evraz shares halted, the price finished the day at 80.9p, down 12.6%. Had business continued as usual, I wouldn’t like to guess where the chart might have ended.
Free market suspended
I applaud the FCA’s suspension of Evraz shares. I support letting share prices go where they will when all information is open to all shareholders. But when a legal action interferes with the free market, and regulatory effects on the share price are not known, I think it is only right to suspend trading until legal outcomes are clarified.
To get back to my opening thought, on what investors need to know. I don’t think anyone can know anything more, right now, about the regulatory fallout from the sanctions on Abramovich. For now, shareholders simply need to sit it out and wait.
There is no way to buy or sell shares on the open market anyway, so I don’t see any practical point in worrying about that. Worry is, however, understandable.
Evraz share price future
This is pure speculation on my part now. But I hope that the wide international ownership of Evraz shares will lead the UK government to go easy on the company itself. Seize the stockholdings of Abramovich and any other Putin associates, sure. But don’t harm other shareholders who will surely almost universally oppose Russia’s war?
What do investors need to know about the long-term outlook for the Evraz share price? I think that still comes down to what I was saying Wednesday.
And that’s all about the fundamental performance of the company, the outlook for the steel business, and the timescale for Russia’s aggression to be defeated and Russia-based companies to return to respectability. We have no way to quantify much of that right now.