Russia-Ukraine Tensions Seen Affecting Mining, Energy and Grain Sectors
January 27 2022 - 8:18AM
Dow Jones News
By Jaime Llinares Taboada
Heightening tensions between Russia and Ukraine add more
uncertainty to equity markets, but in general exposure to these
countries is relatively low, U.S. investment bank Jefferies said in
a report.
Across all industries, the biggest impact would be on mining, as
Russia is a key supplier of nickel, platinum group metals, aluminum
and coal; oil and gas, as Russia also stands out as one of the
world's main producers; and wheat and grain, where Ukraine is a
major global player.
The resulting increase in commodity prices could benefit miners
such as Glencore PLC, South32 Ltd. and Rio Tinto Ltd.; and energy
companies including BP PLC, TotalEnergies SE and OMV AG.
As for chemicals, Jefferies sees a more balanced outlook, as
platinum group metals are used in auto catalyst products, but many
companies are also secondary refiners of these materials.
Conversely, the asset management, hydrogen, online-pharmacy and
software sectors aren't materially exposed to the consequences of
the conflict, Jefferies says.
Overall, the bank's analysts say that the companies with the
highest exposure to Russia include Bank of Georgia Group PLC,
Societe Generale SA, Renault SA, Nokian Renkaat Oyj, Coca-Cola HBC
AG, Carlsberg AS, Yandex NVVK Co., VK Co., Krka d.d., Gedeon
Richter PLC, Polymetal International PLC, Mondi PLC, Danone SA and
Keywords Studios PLC.
As for Ukraine, the country accounts for 3% of Coca-Cola HBC's
sales and 8.5% for Medicover AB. It also hosts 4% of Ubisoft
Entertainment SA's workforce.
"Rising political tensions between Russia and Ukraine throw more
uncertainty at investors just in the midst of tightening monetary
policy, rising inflation and the continued threat from new Covid
strains--2022 promises to be a good year for equity volatility,"
Jefferies said in the report.
Write to Jaime Llinares Taboada at jaime.llinares@wsj.com;
@JaimeLlinaresT
(END) Dow Jones Newswires
January 27, 2022 08:03 ET (13:03 GMT)
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