17 avril 2022
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 flagship index of the Paris Stock Exchange most present 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 the close of February 23, the CAC 40 has resisted 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 after since the start of the conflict. At the top of the most popular CAC 40 stocks, 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 after 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 related to the war in Ukraine. The price of steel has thus gone 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. Values belonging to the health sector such as Eurofins Scientific, the leader in bio-analysis (+11.8%), Sanofi (+10.7%) or Air Liquide (+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 (after France where sales reached 521,710 units, but well ahead of Germany where the French manufacturer sold only 177,795 vehicles). Its competitor Stellantis (-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 have massively 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. Crédit Agricole (-21.3%) and BNP Paribas (-16.9%) were also victims of strong 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 stakes 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.
Light pump for TotalEnergies
Alstom has seen its stock derailed by 10.3% since the Russian-Ukrainian conflict. Alstom is present directly in the country via its subsidiary Transmashholding (TMH) up to 20%. 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. Kering (-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%).
Safran (-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 coming from Russia while the country is the first supplier of Airbus and Safran.
Among the stocks that have shown resilience in recent weeks, we can cite Legrand, which has suffered a slight loss of 1.5%, Dassault Systèmes, which has picked up 0.7%, and even Pernod Ricard (+0.9%). Orange, EssilorLuxottica and Capgemini are staying the course with increases of more than 2% since February 24.
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