U.S. companies are fleeing Russia, something that could create headwinds going forward. For companies in countries that haven’t imposed sanctions, however, it could be a long-term opportunity.
Since Russia invaded Ukraine, U.S. companies have announced plans to leave the country. Walt Disney (ticker: DIS) won’t release its movies; Apple (AAPL) won’t sell its iPhones, and Ford Motor (F) will stop making cars. For most, the hit will prove immaterial—Russia is just too small a market to make all that big a difference.
But not for all. Citigroup strategists screened for companies with exposure to Russia, and found 60 globally. Those companies, in aggregate, have fallen 17% this year, more than double the MSCI All-Country World Index, which has fallen 8%.
Citigroup highlighted 13 companies in the U.S. They include Coty (COTY), which gets 2.5% of its sales in that country, PepsiCo (PEP), which gets 4.5% of its sales there, and FleetCor Technologies (FLTN), which gets about 4.5% of revenue from Russia. Oil-services companies Baker Hughes (BKR), Schlumberger (SLB), and Halliburton (HAL) are on the list, as are materials company Corteva (CTVA) and consumer staple Mondelez International (MDLZ). Round it out are Grid Dynamics Holdings (GDYN), Epam Systems (EPAM), Inter Parfums (IPAR), Herbalife Nutrition (HLF), and Brown-Forman (BF.B). If sanctions remain in place, these companies may have to look elsewhere to make up those sales.
Citigroup’s Robert Buckland notes that companies in countries that haven’t placed sanctions could ultimately benefit. “The impact of the current crisis could vary according to the company’s primary listing,” he writes. “For example, firms based in countries that have not introduced sanctions against Russia (e.g., China, India) will see their business impacted by economic disruption in the short term, but may be offered opportunities in the long term.”
The Chinese and Indian companies on the list include Geely Automobile Holdings (0175.Hong Kong), Great Wall Motor (2333.Hong Kong), Yentai Jereh Oilfield Services Group (002353.China), Oil and Natural Gas Corporation (ONGC.India), Dr. Reddy’s Laboratories (RDY), and Carborundum Universal (CRBR.India).
Write to Ben Levisohn at [email protected]
