Polymetal plunges 35% in London as Ukraine crisis escalates

Polymetal crashes 35% and investors scramble for an exit

What happens when a London-based gold and silver miner with assets in Russia becomes the epicentre of an armed conflict? Polymetal International, listed on the London Stock Exchange (LSE) under the ticker POLY, lost 35% in a single session after the escalation in Ukraine. The company issued an urgent statement on 24 February 2022 confirming that all its operations were continuing, but the market did not wait to read the fine print. Within minutes, the stock went from being a comfortable bet on gold to a logistical, legal and fruta problem.

The 35% plunge on the London Stock Exchange

The drop was no mere stumble. In just a few hours, Polymetal's price tumbled to -56.8% at the worst moments of the session, according to the figures circulating on trading desks. Retail investors, many with small positions in index funds or dividend portfolios, found that their exposure to a gold miner had turned into exposure to a country at war. The reaction was mixed: some bought in a panic, others tried to sell without success.

"I bought on Thursday when it was at -38%. On Friday it rose +17%. We'll see on Monday. This is still very volatile," recounted one investor who had bet on a rebound. Volatility became the only reliable asset. Gold rises, the miner falls: the paradox left more than one person staring at the screen in bewilderment.

Why a gold miner sinks when gold rises

The answer lies in geography. Polymetal is an Anglo-Russian company with mines in Russia and Kazakhstan. The military escalation set off every alarm: sanctions, blocked payments, expropriations and, above all, the impossibility of operating normally in a market that is closing by the minute. The company's statement, released at 14:31 Moscow time, tried to calm nerves by insisting that "all its operations" were still running. The market read it as a desperate gesture.

Some argue the fall is a typical overreaction by a market that does not know how to price political risk. Against that stands the argument that a company with assets in a sanctioned country can see its dividends, its accounts and even its ability to sell production frozen. The question is not whether Polymetal is worth less, but how much less.

The dividend, the big unknown

For investors who bought for income, the dividend became the centre of the debate. "Will we foreign investors get it, or will we get screwed for being semi-Russian?" one participant wondered. The company usually paid part of it in May, but with the London delisting on the horizon and the migration of shares to the Astana stock exchange (Kazakhstan), uncertainty is total. Those who bought at 2.80 euros including fees cling to the hope of getting paid. Those who entered at 4 euros already accept that their money is in limbo.

The solution some explored —opening accounts with Kazakh brokers such as Tabys or Freedom Finance— ran into language barriers, SMS codes that never reached Spain and transfers that took weeks. "In the end it's obvious that this omnibus account thing is a total shitshow. For all intents and purposes we don't own any of our positions," declared one investor who watched the POLY ticker vanish from his portfolio.

The bureaucratic maze of frozen shares

The problem is not just the price. It's ownership. Polymetal shares listed in London were frozen for retail investors, who could only sell, not buy. Meanwhile, the big institutional funds were free to buy at rock-bottom prices. The asymmetry sparked outrage: "Us ordinary mortals aren't allowed to buy Russian shares at liquidation prices, only sell them. But funnily enough BlackRock is allowed to buy those very same shares," one participant complained.

The migration to the Astana stock exchange was presented as the only way out, but the process is an ordeal. There is talk of 18 months of lock-up, of the London delisting and of a separation of Russian and Kazakh assets. The target price, previously set between 1,200 and 1,800, was revised down to 500. Those who bought near 600 watch their investment turn into an exercise in forced patience.

The war of narratives: opportunity or trap?

The debate split into two camps. One, those who see a historic opportunity: "If Pilingui plays nice, the dividends alone pay for it in three years," one investor calculated. The other, those who believe market capitalism only works when there is no real risk: "They pretend to let you play the game, but when you start winning, they sweep the board and walk off with your money," another summed up.

The discussion then turned to the manager of the fund many held in their portfolios. A Spanish value fund that included Polymetal among its positions became the focus of criticism. "It seems little to me when the fund manager is who he is, with the profile he has," one participant noted. The defence came quickly: "He was an aircraft pilot and has investment training. Polymetal fell because of the Ukraine war. You only have to look at what peine to Paramés with Arytza to stop trusting supergurus." The comparison with home-grown value investing hung in the air.

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In the end, the story of Polymetal is that of an asset that looked solid and turned into a riddle. Those who bought cheap pray for their dividends. Those left trapped in omnibus brokers discover their ownership was a legal fiction. And meanwhile, gold keeps rising. Dry irony: the precious metal shines, but the miner that extracts it fades.