U.S. stocks with Russian exposure rally
The USA’s exposure to Russia isn’t massive by any stretch, but it is increasing, thanks to a growing middle class in Europe that is snapping up U.S. products, such as cars, fast food, soda and snacks.
That’s why any U.S.-led economic sanctions against Russia, and potential backlash and retaliation from an angry Kremlin, could squeeze the earnings of some U.S. firms that do business there, says Joe Quinlan, chief market strategist at U.S. Trust.
Data supplied by U.S. Trust show U.S. investment in Russia totaled $14.1 billion in 2012, the latest figures available, which accounts for just 0.3% of total U.S. global investment. U.S. sales in Russia totaled $45.8 billion in 2012, with earnings of $1.5 billion. U.S. exports to Russia account for just 0.7% of the the nation’s total exports.
Still, any rift between the U.S. and Russia could spell trouble for U.S. firms doing business in Moscow and other Russian cities. So far, neither the U.S. nor Russia has announced broad punitive economic sanctions, which gave the broader stock market a big lift Monday, despite the controversial yet peaceful vote Sunday in Crimea to break from Ukraine and reunify with Russia.
Here are a handful of companies that could be impacted by the Ukraine-Russia crisis:
• Ford Motor. The automaker, which established its first dealership network in Russia back in 1991 and its first manufacturing facility in 2002, upped its stake there in 2011 with a joint venture with Sollers, which includes an assembly plant in St. Petersburg.
Ford Sollers announced last year the sale of the 1 millionth Ford car sold to a Russian customer. The 50-50 Sollers joint venture has announced plans to build a $274 million engine plant elsewhere in Russia, as well as its plans to launch the sale of the all-new “EcoSport” SUV in Russia. Last year, full Russia-based production of the Ford Explorer began.
Ford shares ended regular trading Monday up 1.3% to $15.28.
• General Motors. Russia is the fifth-biggest market for GM’s Chevrolet brand, according to GM. Last year, the automaker sold 174,649 vehicles in Russia, a drop of 14.8% from the prior year. Still, Russia is a big market for the U.S. automaker.
GM shares, which have been hampered by a massive recall, finished up 1.6% to $34.63.
• PepsiCo. The seller of soda and snacks got 7.4% of its $66.4 billion in 2013 revenue from Russia, according to S&P 500 company data supplied to USA TODAY by Deutsche Bank. PepsiCo sells well-known snack brands, such as Lay’s potato chips, Doritos and Cheetos, and soft drinks such as 7-Up and Pepsi.
Pepsi-Co shares gained 1.3% to $82.05.
• U.S. Banks. Citigroup has the biggest exposure of U.S.-based banks in Russia, with $10.3 billion in assets there, according to data supplied by RBC Capital Markets. Roughly $1.7 billion of that exposure is tied to retail loans to Russians.
JPMorgan Chase has net Russian exposure of $5.4 billion, RBC says. The bulk of that is tied to lending, with $4.7 billion in loans outstanding.
Citigroup shares gained 1.8% to $47.73, while JPMorgan shares rose 1.4%, to $57.58.
• ExxonMobil. In 2011, the U.S. energy giant formed an alliance with Russia’s state-controlled petroleum giant Rosneft to develop “offshore projects of unprecedented scale in the Russian Arctic and Black Sea regions, which are home to the world’s largest hydrocarbon resources base.”
Exxon shares rose 0.9% to $94.32.
(By Adam Shell)
Source: usatoday
