Russia-Ukraine Tensions Seen Affecting Mining, Energy and Grain Sectors

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 [e-mail]; @JaimeLlinaresT

(END) Dow Jones Newswires

January 27, 2022 08:03 ET (13:03 GMT)

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