September 21, 2023

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Factbox: European stocks at risk if Russia invades Ukraine

The German share rate index DAX graph is pictured at the stock exchange in Frankfurt, Germany, January 26, 2022. REUTERS/Personnel

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LONDON, Feb 18 (Reuters) – Russia-exposed European shares have been less than strain for months amid fears Russia could invade Ukraine and the stand-off has induced volatility throughout the European stock market.

Soon after Russian-backed separatists in breakaway locations in jap Ukraine declared an evacuation of citizens on Friday, Germany’s major stock index (.GDAXI), the most delicate to a potential conflict in Ukraine, fell additional than 1% and headed towards a 4-month minimal strike before this week. go through a lot more

The United States has explained Russia could invade Ukraine at any time and could generate a shock pretext for an attack, and reaffirmed a pledge to defend “each and every inch” of NATO territory. study a lot more

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Investors are monitoring shares most at risk from possible sanctions in opposition to Russia, like banking companies, oil, mining, consumer and construction material, providers with publicity to Russia and Ukraine.

Citi analysts stated their basket of European corporations with Russian exposure has underperformed for the duration of periods of heightened tensions, as in 2014 and 2018, adhering to Western sanctions from Russia.

Citi’s basket of Russia-uncovered providers

The financial commitment bank’s checklist of just about 40 European shares with exposure to Russia and Ukraine includes beverage corporations Carlsberg and Coca Cola, which manufactured 13% and 15% of their profits in Russia, Nivea maker Beiersdorf (BEIG.DE) and France’s foods huge Danone (DANO.PA), with all over 6% of their gross sales in Russia.

European stocks with publicity to Ukraine include things like London-listed iron pellet producer Ferrexpo (FXPO.L) with its complete procedure based mostly in the nation, Citi claimed.

In accordance to Jefferies analysts, France’s movie gaming organization Ubisoft (UBIP.PA) has 4% of its workforce in Ukraine, even though Sweden-centered healthcare and diagnostic services supplier Medicover (MCOVb.ST) built 8.5% of its sales in the country.

European banking companies with area branches in Russia are the most exposed to danger resulting from opportunity sanctions in the party of any further escalation, JP Morgan said.

Austria’s Raiffeisen Bank Global (RBIV.VI) derived 39% of its approximated web earnings final year from its Russian subsidiary, while Hungary’s OTP, UniCredit (CRDI.MI) and Societe Generale (SOGN.PA) produced amongst 6% and 7% of theirs in Russia very last 12 months, JPMorgan numbers confirmed.

Select European stocks with Russia exposure

As Russia provides 35% of Europe’s gasoline desire, the tensions in Ukraine have elevated the pitfalls of energy disruptions in Europe, Goldman Sachs analysts said.

“We would count on the German DAX and MDAX (the mid cap index) (.MDAXI) to be far more susceptible than other state indices, primarily thanks to the reliance of their firms on power for their manufacturing,” they stated.

They anticipate oil and fuel organizations to outperform on headlines of more escalation and climbing European fuel price ranges, citing Total (TTEF.PA) and Equinor (EQNR.OL) as the main beneficiaries.

Take note: The graphic over is Citi’s comprehensive list, reprinted with authorization of Citi Analysis and not to be reproduced.

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Reporting by Joice Alves
Editing by Chizu Nomiyama

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