CAC 40: With the war in Ukraine, what is the impact of the conflict on the values ​​of CAC 40?

(BFM Bourse) – Russia’s invasion of Ukraine on February 24 sent a chill through financial markets. in the image of General Partnership either Renault, several publicly traded French companies have relatively significant exposure to Russia. Almost two months after the outbreak of the Ukrainian conflict, what are the values ​​of the ACC 40 Who was tested by the Russian offensive and who, on the contrary, put up resistance?

The Paris market closed 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 in which the Parisian market broke its records for more than 20 years. Traders then approached 2022 with optimism. But from January 2022, the markets heard the sound of boots coming from the east of the European continent. On February 24, 2022, tensions escalated with the Russian offensive against Ukraine by land, air and sea in what is the largest state-to-state attack in Europe since World War II. Another bad news, since the management of costs on the rise became a must-see for companies.

France first foreign employer in Russia

The current crisis actually dates back to the February 2014 Ukrainian revolution, which resulted in the ouster of pro-Russian President Yanukovych (convicted in absentia and now in exile in Russia). His overthrow was followed in reaction by Russia’s annexation of Crimea and then Russia’s intervention in Ukraine’s Donbass, not without significant collateral damage with the destruction of one plane, the Malaysia Airlines flight from Amsterdam, killing almost 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, which lasted for years to come.

For years, therefore, the relationship between Russia and the West has been made up of recurring tensions interspersed with phases of appeasement. Et malgré les postures et les coups de pression de part et d’autres, les échanges économiques se poursuivent jusqu’à ce jour, les relations économiques s’affirmant même particulièrement dynamique avec la France, qui bénéficie d’une position économique ancienne et stratégique in Russia.

Furthermore, with more than 500 French subsidiaries established in various fields, including 35 CAC 40 companies, France is the largest foreign employer in Russia with almost 160,000 employees in total. Thus, France’s significant engagement with the Russian economy translates into significant exposure for a number of French-listed flagships. As expected, the stocks of the flagship index of the Paris Stock Exchange with the most presence in Russia have paid a heavy price since the outbreak of the conflict in Ukraine on February 24, 2022, that is, almost two months ago. Since its closure on February 23, the ACC 40 it held up well with a 2.8% drop. Behind this average, there is a large gap between the index values.

Defense, defenses and steel: the winning trio

Unsurprisingly, defense sector stocks have been the most sought after since the start of the conflict. At the top of the values ​​of the ACC 40 the most popular, Thalès stood out with a rise of 52.5% (between the close of February 23 and that of Thursday, April 14) to register this Thursday a new historical record of 129 euros. The French group obtains 50% of its income from its military activities. The arms race on European soil should continue to feed the bullish current on the title of the French electronics group.

ArcelorMittal (+14.4% in the period) ranks second among the stocks most sought after by investors since the outbreak of the Ukrainian conflict. The steelmaker’s stock is buoyed by rising steel prices in Europe. This essential metal for the automotive or construction industry has become a scarce commodity mainly due to supply problems linked to the war in Ukraine. The price of steel thus went from less than 1,000 dollars a ton at the end of February to more than 1,479 dollars today, even reaching a maximum of 1,541 dollars at the end of March.

Defensive values ​​played their role to the maximum. Its safe haven status provides a haven of peace for investors seeking safety during stock market crises. Values ​​belonging to the health sector such as Eurofins Scientific, leader in bioanalysis (+11.8%), Sanofi (+10.7%) or liquid air (+9.9%) did not usurp its reputation as a safe haven.

Stocks from the retail and consumer sectors have also stood out in these difficult times in the markets, such as Carrefour which has gained almost 11.7% or L’Oréal which has risen 5.2% since the start of the Ukrainian conflict.

Get out of the way of auto and banking stocks

On the contrary, on the back of the package, we find Renault. The diamond brand is paying a heavy price for its exposure to the Russian market with a stock that has fallen more than 30% from two months ago. 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 in the Russian market with a considerable share of 30% of new registrations. With 482,264 vehicles sold, Russia represents the automaker’s second largest global market (after France, where sales reached 521,710 units, but far ahead of Germany, where the French manufacturer sold just 177,795 vehicles). your competitor stellaris (-17.6%) is certainly less exposed to the Russian market, but suffers from a shortage of semiconductors that is blocking production.

Bank stocks, buoyed by the return of inflationary pressures, were the stars of the leading index at the beginning of the year…until the Russian invasion of Ukraine. Investors overwhelmingly turned their backs on General Partnership which has lost 26.4% since February 24. In fact, the red and black bank held a leading position in Russia through its subsidiary Rosbank, which weighs around 9% of the group’s total net banking income (GNP). In 2021, the activities of its subsidiary Rosbank 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%) and BNP Paribas (-16.9%), were also the victims of strong profit-taking despite their limited exposure to Russia.

Until February 23 Engie It was one of the star actions of the Parisian coast. The energy stock had started the year well with a 10% gain in its backpack. The group had posted considerably higher results for 2021 and showed confidence in a steady improvement in their performance over the next three years. Then, rising tensions in Eastern Europe changed the situation… Engie in fact, it is well exposed to Russia through its holdings in Gazprom’s pipelines (Nord Stream 1 and 2). The former Gaz de France then explained that it was actively looking to diversify its supplier portfolio by using ever-increasing volumes from other European and international countries.

Alstom has seen its shares derail by 10.3% since the Russo-Ukrainian conflict. Alstom It has a direct presence in the country through its subsidiary Transmashholding (TMH) with a 20% stake. The development of the Russian rail transport market is, together with Germany and Italy, one of the main current growth drivers of the European market (accounting for half of the group’s revenue).

TotalEnergies limits damage with a contained drop to 5.7%. The rise in black gold prices since mid-February (+30%) has offset the group’s exposure to Russia. The hydrocarbon producer is, in fact, the operator of the Termokarstovoye oil field (58.89%) and has a 20% stake in the Kharyaga field. Total Energies it is also an 18.9% shareholder in PAO Novatek, the leading independent natural gas producer behind public giant 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 infrastructure and services. Dried (-17.4%) loses ground even though the luxury group is less exposed to Russia than its peers 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 giants of aeronautics must do without titanium from Russia while the country is the first supplier ofAirbus Y saffron.

Among the stocks that have shown resilience in recent weeks are Legrand showing a slight loss of 1.5%, Dassault Systèmes taking 0.7% or even Pernod Ricard (+0.9%). Orange, Essilor Luxottica et capgemini they maintain the course with increases of more than 2% since February 24.

Sabrina Sadgui

©2022 BFM Bag

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