(BFM Bourse) – The invasion of Ukraine by Russia on February 24th cast a chill over the financial markets. Like Societe Generale or Renault, a number of listed French companies have relatively significant exposure to Russia. Almost two months following the outbreak of the Ukrainian conflict, what are the values of the CAC 40 who were tested by the Russian offensive and those who, on the contrary, put up resistance?
The Paris market ended 2021 well above 7,000 points, a milestone it had never reached before. The previous vintage had then entered the annals of the stock market, as the year during which the Parisian market smashed its records dating back more than 20 years. Operators then approached the year 2022 with optimism. But from January 2022, the markets heard the sounds of boots coming from the East of the European continent. On February 24, 2022, tensions escalated with the Russian offensive once morest Ukraine by land, air and sea in what is the largest state-on-state attack in Europe since World War II. . Another bad news, as the management of rising costs became a fact not to be overlooked for companies.
France first foreign employer in Russia
The current crisis actually dates back to the Ukrainian revolution of February 2014, which resulted in the dismissal of pro-Russian President Yanukovych (convicted in absentia and now exiled to Russia). Its overthrow was followed in reaction by the annexation of Crimea by Russia and then the Russian intervention in Donbass in Ukraine – not without significant collateral damage with the destruction of an airliner, the Malaysia Airlines flight from of Amsterdam, which killed nearly 300 people. In response, not only the United States but also the European Union and other countries imposed a series of economic sanctions on Russia, extended over the following years.
For years, therefore, the relationship between Russia and the West has been made up of recurring tensions interspersed with phases of appeasement. And despite the postures and pressure from both sides, economic exchanges continue to this day, economic relations even asserting themselves to be particularly dynamic with France, which benefits from a long-standing and strategic economic position. in Russia.
In addition, with more than 500 French subsidiaries established in various fields – including 35 CAC 40 companies – France is the leading foreign employer in Russia with nearly 160,000 employees in total. France’s significant commitment to the Russian economy therefore translates into significant exposure for a number of French-listed flagships. Unsurprisingly, the values of the Paris Stock Exchange’s flagship index with the most presence in Russia have paid a heavy price since the outbreak of the conflict in Ukraine on February 24, 2022, i.e. almost two months ago. Since closing on February 23, the CAC 40 held up well with a drop of 2.8%. Behind this average, there is a large gap between the values of the index.
Defense, defenses and steel: the winning trio
Unsurprisingly, defense sector stocks have been the most sought following since the start of the conflict. At the top of the values of the CAC 40 the most popular, Thalès stood out with a surge of 52.5% (between the close of February 23 and that of Thursday April 14) to register a new historic record at 129 euros this Thursday. The French group derives 50% of its income from its military activities. The arms race on European soil should continue to fuel the bullish flow on the title of the French electronics group.
ArcelorMittal (+14.4% over the period) is in second place among the stocks most sought following by investors since the outbreak of the Ukrainian conflict. The title of the steelmaker is galvanized by soaring steel prices in Europe. This essential metal for the automotive or construction industry has become a rare commodity mainly due to supply problems linked to the war in Ukraine. The price of steel thus rose from less than 1,000 dollars per ton at the end of February to more than 1,479 dollars currently, even registering a peak at 1,541 dollars at the end of March.
Defensive values played their role to the full. Their status as a safe haven constitutes a haven of peace for investors seeking safety during stock market shocks. Stocks belonging to the health sector such as Eurofins Scientific, the leader in bio-analysis (+11.8%), Sanofi (+10.7%) or Liquid air (+9.9%) did not usurp their reputation as a safe haven.
Shares in the retail and consumer sectors have also stood out in these difficult times on the markets, such as Carrefour which has gained nearly 11.7% or L’Oréal which has risen by 5.2% since then. the beginning of the Ukrainian conflict.
Exit from the road of automotive and banking stocks
Conversely, at the back of the pack, we find Renault. The diamond brand is paying the high price for its exposure to the Russian market with a title that has dropped more than 30% for two months. The manufacturer is one of the largest foreign companies in Russia. Taking into account its subsidiary Avtovaz (owner of Lada), the group is number 1 on the Russian market with a considerable share of 30% of new registrations. With 482,264 vehicles sold, Russia thus represents the car manufacturer’s second largest global market (following France where sales reached 521,710 units, but well ahead of Germany where the French manufacturer sold only 177,795 vehicles). Its competitor Stellaris (-17.6%) is certainly less exposed to the Russian market but suffers from the shortage of semiconductors which is blocking production.
Bank stocks, driven by the return of inflationary pressures, were the stars of the leading index at the start of the year…until the Russian invasion of Ukraine. Investors overwhelmingly turned their backs on Societe Generale which has lost 26.4% since February 24. The red and black bank indeed occupied a leading position in Russia via its subsidiary Rosbank, which weighs around 9% of the group’s total net banking income (GNP). In 2021, the activities of its Rosbank subsidiary accounted for 2.8% of its total net banking income (equivalent to turnover) and 2.7% of net income.
On April 11, the French bank announced that it would stop its activities in Russia with the sale of its entire stake in Rosbank. Agricultural credit (-21,3%) et BNP Paribas (-16.9%), were also victims of heavy profit-taking despite their limited exposure to Russia.
Until February 23, Engie was one of the star stocks on the Parisian coast. The title of the energy company had made a good start to the year with a gain of 10% in its haversack. The group had published sharply higher results for 2021 and showed its confidence in a steady improvement in its performance over the next three years. Then the rise of tensions in Eastern Europe changed the situation… Engie is indeed well exposed to Russia through its holdings in Gazprom pipelines (Nord Stream 1 and 2). The former Gaz de France then explained that it was actively seeking to diversify its portfolio of suppliers by using increasing volumes from other European countries and internationally.
Alstom has seen its stock derailed by 10.3% since the Russian-Ukrainian conflict. Alstom is directly present in the country via its subsidiary Transmashholding (TMH) with a 20% stake. The development of the Russian rail transport market is, along with Germany and Italy, one of the current main engines of growth in the European market (which accounts for half of the group’s revenues).
TotalEnergies limits the damage with a decline contained at 5.7%. The surge in black gold prices since mid-February (+30%) has offset the group’s exposure to Russia. The hydrocarbon producer is indeed the operator of the Termokarstovoye oil field (58.89%) and holds a 20% interest in the Kharyaga field. TotalEnergies is also an 18.9% shareholder in PAO Novatek, the main independent producer of natural gas behind the public juggernaut Gazprom.
Note the worrying performance of Wordline (-26.8%) despite its low exposure to Ukraine and Russia. The payment solutions specialist was penalized by Apple’s plan to compete head-on in payment services and infrastructure. Dry (-17.4%) is losing ground even though the luxury group is less exposed to Russia than its counterparts LVMH (-3.9%) and Hermès (+5.2%).
Saffron (-7.5%) and Airbus (-6.9%) have lost ground since the Russian offensive in Ukraine. The two tricolor aeronautics giants have to do without titanium from Russia when the country is the leading supplier ofAirbus and of Safran.
Among the stocks that have shown resilience in recent weeks are Legrand which shows a slight loss of 1.5%, Dassault Systèmes which grabs 0.7% or even Pernod Ricard (+0,9%). Orange, EssilorLuxottica et Capgemini are staying the course with increases of more than 2% since February 24.
Sabrina Sadgui
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