By Carolyn Cohn

LONDON (Reuters – As they prepare for Ukraine’s invasion, global fund managers are cutting down their Russian investments. Now, any hope of any relief has also vanished.

After the Russian invasion of Ukraine, which was a massive land-air and sea assault on Thursday, the rouble fell nearly 7 percent to historical lows. Record 30% losses were recorded on Moscow’s stock exchange.

Allianz (DE): Europe’s largest insurer, and one of the world’s most prominent investors, announced Thursday that it had stopped exposure to Russian government bond.

BlueBay Asset Management, which has cut its holdings, and two Danish pension funds said this week that they are pulling back from Russia.

“We took the warnings in November from Western governments seriously as to risks of a Russian attack on Ukraine and reduced exposure across all our funds,” Tim Ash, senior emerging market sovereign strategist at BlueBay, said.

Global CIO for Edmond de Rothschild Asset Management Benjamin Melman stated that he was looking at the equity and Russian-exposed debt portfolios.

The company has made investments in European firms that are exposed to Russia, and it has Russia-related companies in its emerging markets portfolio. It also has some Russian corporate bonds.

Melman explained that “we need to think about how the invasion changes the economics scenario.”

Russia, once an attractive emerging market in BRICs, which includes Brazil, Russia India, China and India, fell out of favor before the recent threat to war with Ukraine.

According to Copley Fund Research (after investors have suffered from sanctions), international asset management investments in Russia have declined in the recent years.

Copley reported that Russian emerging market equity manager have around 4% more in Russia than they did after the financial crisis.

After Russia recognized Donetsk, Luhansk (in eastern Ukraine) as independent, the West imposed sanctions against Russia this week and promised to take tougher actions.

“LET’S GET THROUGH THE WEEKEND”

Reuters was told by several investors that their Russian investments were very small.

Seema Shah, principal strategist at Principal Global Investors stated that there is an underweight in Russia for emerging market assets.

She stated, “In the lead-up to conflict we had already had limited exposure. So we won’t alter that.”

Alain Zeitouni of Russell Investments’ multi-asset EMEA said that the exposure of the fund manager to Russia and Ukraine is “very modest”. The firm has not made any adjustments.

British asset manager M&G, France’s AXA Investment Managers and Swiss insurer Zurich also said their Russian holdings were limited.

However, fund managers warn against taking hasty decisions when it comes to Russian assets being offloaded.

Morningstar Investment Management’s Global CIO Dan Kemp said that Morningstar had Russian local currency debt and did not intend to sell it.

His key point was to “not react to the situation in a snap, but to take a step back to understand what effect it has on bonds and how they are priced in.”

Russian foreign currency yields are now at 19% after being around 7.5% as of October.

Schroders LON: The invasion was being assessed, stock by stock, bond after bond. However, the situation remains very uncertain according to Johanna Kyrklund (group chief investment officer, UK asset manager), who said that it is difficult to predict how much the market will fall.

“Let’s try to get the weekend over with.”

Copley analysts stated in an earlier note this week that Russian assets would be impacted for some time, as a result of the events of 2014.

Investor sentiment took over two years to recover a sense of positiveness in Russia. Even then, it was never back at pre-Crimea levels.