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Highlights
- Russia declares war on Ukraine.
- Economic sanctions imposed by the US.
- Growth funds and KiwiSaver to sell their share held in Russian companies.
Even as Russia launched a full-scale invasion campaign against Ukraine, New Zealand funds would have to sell shares they hold in Russia-listed companies. If there are referred sanctions against Russia, growth funds may be forced to sell shares they hold in some Russian companies. KiwiSaver, in particular, could be impacted.
Global share markets fell following the Russian invasion and the New Zealand stock market was down by 3.31% at 11,733 on the news of the invasion. The index lost 401.8 points and was 13.4% below its high of 13,558 on 8 January 2021. A correction is a decline of 10% or more from its recent peak. It was the worst day for the NZX since 23 March 2020. Even Australia’s benchmark – the S&P/ASX200 Index - closed 3.3% down, or 215.1 points, at 6990.6.
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Also Read: Russia declares war on Ukraine: How Biden & other world leaders are reacting
The value of KiwiSaver funds dropped, but more than that, there is a public concern that the retirement savings fund was invested in Russian companies with links to the Russian government.
Large KiwiSaver funds, including ASB and Westpac growth funds that hold listed companies in Russia, including Sberbank, will face consequences as economic sanctions imply a ban on
While the funds have invested in companies that do not have a link with Kremlin, the Funds may have to withdraw their funds.
Related Read: Ukraine crisis: What Western sanctions mean for Russia?
According to a spokesperson, there is no indication that the companies are involved in gross human rights abuses or other issues related to the attack on Ukraine, but with US sanctions, they could be forced to sell some of the Russian companies held.
Also Read: Cryptocurrencies suffer huge selloffs as Putin orders military operations in Ukraine
President Joe Biden had imposed the first set of sanctions against Russia for launching the invasion of Ukraine and said that more would come if there were further attacks.
He had said that the US would impose sanctions against two large Russian financial institutions and Russian sovereign debt.
The United States had promised even more stringent sanctions against Russia if it invaded Ukraine, which was defined as any movement of troops across the border.
The United States had applied sanctions against some banks banning their exposure in the US, prohibiting them from trading with Americans and freezing their U.S. assets.