Commodities giant Glencore saw its share price drop nearly 2 percent on Friday's news that the Treasury Department was sanctioning seven Russian oligarchs and their businesses, as well as 17 Russian government officials. The slide then continued into Monday as it traded more than 4 percent lower.
This is because Glencore, the largest mining company in the world, owns an 8.75 percent stake in major Russian aluminum producer Rusal, named in the Treasury's latest sanctions list. The instance represents one initial impact of the punitive measures, meant to scare away Western investment in the Russian Federation. On Monday, the ruble was down and Moscow-traded stocks suffered their biggest drop in four years.
"Russian-Western relations continue to deteriorate, with little sign of de-escalation," Timothy Ash, senior emerging markets portfolio manager at BlueBay Asset Management, said in a note Monday, describing the sanctions as the most significant yet. "This is not even a Cold War, it's actually gone beyond that into a Hybrid War."
Glencore is headquartered in Switzerland and trades in London.
The sanctions, which put the select people and entities under a Specifically Designated Nationals (SDN) list, are a part of CAATSA (the Countering America's Adversaries Through Sanctions Act), which was passed by Congress in August 2017 in response to Russia's interference in the 2016 U.S. election and its military actions in Ukraine and Syria. The SDN label freezes a person or company's U.S. assets and forbids Americans from doing business with them.
Until Friday, however, such targeted and harsh measures had not been enacted, largely seen as a result of Donald Trump's apparent reluctance to punish Russian President Vladimir Putin's government.
The new sanctions up the ante in threatening Western investments in Russia: U.S. stockholders now have 30 days to dispose of their shares in major Russian firms Rusal, En+ and GAZ, the last of which is Russia's largest bus company. The first two are owned by Russian billionaire and aluminum magnate Oleg Deripaska, a close ally of Putin. Those companies will also be cut off from Western financial markets.