Consumer Slowdown Key Risk For Russia-Exposed Companies
With so many sector analysts looking at implications for companies with exposure to Russia and Ukraine, let us begin by saying that few major companies would have taken big bets on Russia in particular and expected an uncomplicated path. Arguably above-average risk premiums in European terms would have been inputted into any risk/reward used by the likes of Carlsberg and Danone, which are two major global food and drink companies with major exposure to Russia. This article will look at some of the main foreign food and drink companies with exposure to Russia and briefly look at how domestic companies might be impacted.
Europe Team View
At things stand, BMI's Europe Country Risk team's core view is that any US and EU actions will be limited to diplomatic mediation efforts, with the possibility of targeted economic sanctions in the future. With no support forthcoming from Western powers, we expect the Ukrainian army will be unwilling to launch any offensive against Russian troops, which substantially outnumber the Ukrainian forces. The team remain wary of revising down their 2014-2015 growth forecasts for Russia simply on the basis of the heightened confrontational rhetoric by both the US and EU member states on the one hand, and Russia on the other. While both sides have ramped up threats to impose sanctions on each other, we believe that neither side has a rational interest in seeing the stand-off escalating further.
|Pulling Back Losses|
|Selected Companies Re-based Share Prices (February 28 2014=100)|