Factbox: Russia-exposed European stocks at risk if Ukraine tensions escalates
LONDON, Jan 27 (Reuters) - Russia-exposed European stocks could take a hit if Russia and the United States fail to de-escalate tensions over Ukraine and the stand-off has left investors monitoring shares most at risk from potential sanctions against Russia.
Consumer companies including Coca Cola (CCH.L), Carlsberg (CARLb.CO) and car maker Renault (RENA.PA), which sell their products in Russia and Ukraine, or Italy's bank UniCredit (CRDI.MI), which has local branches in the region are being watched carefully, investment bank analysts said.
Fear of an imminent escalation eased on Thursday and the rouble recovered from the nearly 15-month low hit this week, after Russia said the idea of war with Ukraine was unacceptable. read more
Over the last few weeks, Western nations, including the United States and Britain, have worried that the build-up of Russian forces along Ukraine’s borders could be in preparation for an invasion, which Russia has repeatedly denied. read more
If history repeats itself, shares in European companies with exposure to Russia and Ukraine - including banks, oil, mining, consumer and construction material companies - will fall if tensions lead to punitive sanctions.
Shares in such companies fell in 2014 and in 2018 following Western sanctions against Russia.https://www.reuters.com/article/markets-europe-stocks-idINL6N0PS2QB20140717
Citi analysts said their basket of European companies with Russian exposure has faired relatively well in January as a rise in international oil prices amid fears of disruption supported energy stocks including BP , Total Energies (TTEF.PA) and OMV (OMVV.VI).
But the group of stocks has historically underperformed during periods of heightened tensions, as in 2014 and 2018, Citi said.
"Any further escalation in current tensions could have a negative impact on these stocks," the analysts told clients.
The investment bank's list of almost 40 European stocks with exposure to Russia and Ukraine includes beverage companies Carlsberg and Coca Cola, which made 13% and 15% of their sales in Russia, and Nivea maker Beiersdorf (BEIG.DE) and France's food giant Danone (DANO.PA), with around 6% of their sales in Russia.
European stocks with exposure to Ukraine include London-listed iron pellet producer Ferrexpo (FXPO.L) with its entire operation based in the country, Citi said.
According to Jefferies analysts, France's video gaming company Ubisoft (UBIP.PA) has 4% of its workforce in Ukraine, while Sweden-based healthcare and diagnostic services provider Medicover (MCOVb.ST) made 8.5% of its sales in the country.
European banks with local branches in Russia are the most exposed to risk resulting from potential sanctions in the event of any further escalation, JP Morgan said.
Austria's Raiffeisen Bank International (RBIV.VI) derived 39% of its estimated net profit last year from its Russian subsidiary, while Hungary's OTP, UniCredit (CRDI.MI) and Societe Generale (SOGN.PA) made between 6% and 7% of theirs in Russia last year, JPMorgan numbers showed.
Above is Citi's full list, reprinted with permission of Citi Research. Not to be reproduced.
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