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Russia’s stock market crashed on Wednesday following President Vladimir Putin’s announcement of a partial mobilization to support his campaign in Ukraine.
The MOEX Russia Index—the ruble-denominated benchmark of the Russian stock market—sank as much as 10 percent on Wednesday, cutting losses at 2,150, according to data from Trading Economics.
According to the website, which provides economic data for 196 countries, the fall in the Russian stock market is a direct consequence of Putin’s call for more troops to fight in Ukraine, Russia’s first mobilization since World War II.
On Wednesday, Putin announced a new mobilization campaign which will call up to 300,000 additional soldiers to join the efforts in the neighboring country which Moscow’s troops invaded on February 24, Russian news agency TASS reported. The Russian president fell short of declaring a full, national draft, calling instead for those with military experience to step forward and join Moscow troops in Ukraine.
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In a videotaped address to the nation, Putin said Russia’s goal in Ukraine had not changed, but calling up reservists was now “necessary and urgent” because Western countries had “crossed all lines” in their support to Ukraine, especially in their provision of weapons and military equipment.
The MOEX Russia index already tanked yesterday after the Kremlin confirmed that it’s moving to annex Ukrainian territory through a series of referendums in the regions of Luhansk, Donetsk, Kherson, and Zaporizhzhia, according to Trading Economics. The annexation could come as soon as next week.
If those territories were to be annexed, Russia has said that it will consider any Ukrainian attack on those areas as one against Russian territory.
“If the territorial integrity of our country is threatened, we will certainly use all the means at our disposal to protect Russia and our people,” Putin said on Wednesday. “This is not a bluff.”
The possible escalation of the conflict is what worries investors, Trading Economics said.
“The annexation is seen by many as serious means of escalation, giving grounds for the Kremlin to consider Ukraine’s recent counterattack an aggression on Russian soil with Western weapons,” according to the website.
Another factor that played a role into the plunging of the Russian stock market was the announcement that the country will tax exports to raise 3 trillion rubles (over $49 billion) to cover its incoming budget deficit.
After resisting for months to Western sanctions, the Russian economy is now starting to show signs of a significant decline, as decreased energy exports to Europe bring consequentially lower profits.
Update 9/21/22, 9 a.m. ET: This article was updated to offer more context.
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