Nerves about the potential impact of sanctions on Russian banks and the orderly functioning of Russian markets are driving investors to trade Russian rouble forwards offshore rather than onshore, even though the central bank told Reuters today it will not impose capital controls

Several Russian companies are also trading at a higher price in the offshore (GDR/ADR) market than the local stock markets, according to research by Bank of America-Merrill Lynch. The price difference  in some cases such as Mobile Telesystems and Magnit is as big as 15-16 percent, BofA/ML notes.

But that differential could provide a buying opportunity in the local market, BoA-ML adds, as any sanctions would not hit retail or fund buyers of the local stocks, but the large banks who often buy the offshore shares.

Restrictions on foreign holdings of Russian assets initially would be restricted to large banks, rather than including individual
or even institutional investors..this should make investments through ADR/GDR instruments at least as risky, if not riskier, than local shares…existing and rising spreads between local and GDR/ADRs may offer considerable opportunities.

 Stocks trading at a large discount in the local market include Magnit and Novatek: