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FTSE Creates 4 Russia-Free Indexes Following Sanctions

Traders work on the floor of the Moscow Exchange.

Stock index compiler FTSE has launched four new indexes that exclude Russia, FTSE said in an announcement sent to investors.

The move follows Western sanctions against several Russian companies over the Ukraine crisis, which had already led another index compiler, MSCI, to produce new indexes that exclude Russia, in response to investor demand.

The FTSE statement on Thursday said the four new indexes would be: the FTSE Emerging ex Russia Index, the FTSE All-World ex US and Russia Index, the FTSE All-World ex Russia Index and the FTSE All-World ex Canada and Russia Index, from Aug. 14.

A spokesman for the London Stock Exchange, the parent company of FTSE, confirmed the move but emphasized that there had been no changes to the FTSE Emerging Index and FTSE All-World Index themselves, which are benchmarks for large numbers of investors.

Possible moves by index compilers to exclude Russian companies from major indexes have caused jitters among investors in Russian stocks, as many funds use the composition of these indexes to determine their portfolio weightings.

Russia's stock market rallied strongly on Monday after MSCI said that it had decided to keep Russia's two largest banks, Sberbank and VTB, in its MSCI Russia index following consultations with investors.

Analysts at Russia's VTB Capital said in a note that the launch of the new FTSE indexes was unlikely to be consequential for the Russian stock market unless U.S. fund manager Vanguard, the major investment company that follows FTSE's indexes, decided to switch to the ex-Russia versions.

"Unlike the MSCI, which is widely followed by a fragmented set of passive and active investors, the FTSE is used by a sharply smaller amount of investors, most notably by Vanguard ETFs [exchange traded funds] where we see c. $5 billion invested into Russia," VTB Capital analysts said.

See also:

MSCI Keeps Sberbank and VTB in MSCI Russia Index

Russian Shares Rally After Big Banks Escape Ejection From Global Benchmark Index

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