The value of Russian investments held by Australia’s biggest super fund, AustralianSuper, has plummeted as sanctions and economic panic following the invasion of Ukraine ravage what was a $300m portfolio.
On Wednesday afternoon AustralianSuper, which has assets of about $245bn and looks after the retirement savings of 2.5 million people, had yet to decide whether to join other Australian funds in dumping Russian stocks.
However, a dramatic collapse in the share price of Russia’s biggest bank, Sberbank, which is subject to sanctions by the US and UK, has already torn a $137m hole in the value of Aussie Super’s Russian investments.
More Australian and international corporate players moved to distance themselves from Russia on Wednesday, with ExxonMobil announcing it would “discontinue operations” and exit the Sakhalin-1 oil and gas field it operates in Russia’s far east, and consumer brands Apple, Ford and Google halting sales in the country.
On Tuesday night, super funds Rest and Cbus followed the lead of $130bn fund Aware, Australia’s sovereign wealth fund the Future Fund, and the NSW state government in pledging to divest from Russian assets as soon as possible.
Both Rest and Cbus said Russian assets made up less than 0.1% of their total investment portfolios.
Hampering divestment efforts, Russia’s central bank kept the Moscow stock exchange closed from Monday until at least Wednesday, making it impossible to sell shares listed there.
However, some Russian companies have secondary listings elsewhere.
This includes Sberbank, which is listed on the London exchange.
The price of Sberbank securities listed in London collapsed from US$15.65 in December, when Aussie listed its holding as worth almost $140m, to as little as US21c on Tuesday after new US sanctions obliterated its European business.
At that price, Aussie’s stake in Sberbank is now worth as little as $1.8m.
AustralianSuper declined to comment but it is believed the fund is considering whether dumping its Russian portfolio would be in the best financial interests of members – the test managers must meet following changes to super law introduced by the treasurer, Josh Frydenberg, last year.
Julien Vincent, the executive director of activist investor group Market Forces, said AustralianSuper’s members would be “rightly appalled to learn their super fund has been invested in companies driving the Russian invasion of Ukraine”.
“Silence from a fund that claims to be a leader on issues of corporate responsibility, especially when others are providing at least a mea culpa on their investments in Russian oil and gas, is an abject failure of leadership.”
He questioned why AustralianSuper held shares in Russian fossil fuel companies in the first place.
Research by Guardian Australia shows that Aussie’s Russian assets include shares and bonds issued by the world’s biggest natural gas company, Gazprom, that are valued on the fund’s books at $3.7m, as well as shares in oil company Rosneft valued at $24.7m.
Shares in Rosneft are likely to tumble in value if trade resumes on the Moscow exchange because oil multinational BP has promised to sell its 19.7% stake in the group.
In other developments, a representative of Russian oligarch Viktor Vekselberg, who is under sanction by the US and UK, quit the board of Falcon Oil & Gas, a company that is in joint venture with Australia’s Origin Energy to develop a gas field in the Beetaloo Basin.
Vekselberg is Falcon’s biggest shareholder, owning 16% of the company through his investment vehicle Lamesa Holdings.
Activist investor group the Australasian Centre for Corporate Responsibility dismissed the resignation of Vekselberg’s representative, Maxim Mayorets, as “window dressing”.
“Vekelsberg stands to personally benefit from any successful exploration that Origin is conducting in the Beetaloo Basin,” the ACCR’s director of climate and environment, Dan Gocher, said.
“Origin has little choice but to suspend its joint venture with Falcon Oil & Gas until such time as Viktor Vekelsberg’s interests in the company are resolved.”
Meanwhile, IFM Investors, a group through which industry super funds make investments into things such as airports, toll roads and the like, said it had “no direct investors nor investments that are included on relevant global sanctions lists”.
“IFM has no direct exposure to Russia through its infrastructure, debt and private equity portfolios,” it said.
“IFM does have a global listed equities indexing capability, where it manages money indexed to the MSCI All Country Index, which includes very limited exposure to Russia.”
MSCI is reported to be considering dropping Russian stocks from its indexes after declaring the Moscow market “uninvestable”.
