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The military aggression in Ukraine had multiple global implications on Russia, since they are the aggressors in the story. Despite the imposed trading halts, multi-billion dollars’ worth of Russian stocks is now worth pennies . However, we also believe that there are elevated tensions between the US and China , given its friendly military collaborations with Russia and refusal to impose sanctions on the latter, post-Ukraine invasion.
With Russia asking for Chinese military assistance for the Ukraine war, the situation could also worsen moving forward. It is uncertain and speculative at best. However, we believe that sending military aid to Russia would expose Chinese economies to similar sanctions and significantly escalate the trade war between the US and China. Given the slow war progress for Russian advancement and the punitive economic sanctions against Russia, many also speculate whether China will take Taiwan by force moving forward.
On a separate matter, five Chinese stocks could also be delisted if American regulators cannot review their audits for three consecutive years. The announcement timing couldn’t have been “better,” given the particularly sensitive time and massive sell-off post Big Tech crackdowns in China since 2021. Since the Chinese law prohibits sharing of information with US regulators, we expect that all US-listed Chinese ADRs may be delisted from US stock exchanges in the future, assuming that US regulators take a hard line.
We encourage you to read our previous article on BABA, which would help you better understand BABA’s competitors and market opportunities in Cloud Computing. Russian Stocks Are Worth Only Pennies Now
The fall in Russian banking, oil, and gas stock Barrons Russia invaded Ukraine on 24th February 2022, prompting the closure of the country’s stock market on 28th February, to prevent the total collapse of the Russian economy. Nonetheless, the damage has been done since many Russian stocks also hold secondary listings in London and the US . The destruction of market value in the Russian banking, oil, and gas industries is astonishing, given that they have declined by over 90% within days. By 2nd March 2022, many of these stocks are worth almost nothing, due to the massive shares dumping by many institutional and retail traders alike.
For example, Sberbank ( OTCPK:SBRCY ), Russia’s largest bank, crashed over 99% from $14 in February to 1 cent on 2nd March 2022, resulting in a record decline in market capitalization of 99.8% from $102B to $190M. Rosneft ( OTCPK:RNFTF ), the biggest oil company in Russia, also fell in disarray after falling in market capitalization from $21.99B to $9B, given how the country is the third-largest oil producer in the world, accounting for up to 10% of the global supply of oil. Schuyler Schouten, a sanctions law expert, and partner with Jones Day, said: It really is the case that the law today may not be the same as the law yesterday, or as what the law will be tomorrow. In the case of this current crisis, we are effectively seeing a year’s worth of sanctions changes compressed into a single week. I think it’s fair to say that this is a militarily, politically, and legally complex sequence of events, and that we are likely at the beginning. ( yahoo!finance ) In addition, the London Stock Exchange suspended the trading of 27 Russian companies, while others, including Deutsche Börse, the New York Stock Exchange, and the Nasdaq, followed suit. In an unprecedented move, these exchange markets are also removing Russian stocks from their primary indices and reclassifying them as “Standalone Markets.” The move could result in a permanent rut on the stock prices once the Russian stock market reopens moving forward. Consequently, investors in Russian stocks have literally seen their portfolios’ value go up in smoke in recent weeks, dashing any hope of future recovery.
With the US and UK already banning Russian oil and the impending ban from the EU , we expect Russia’s oil stocks to fall further due to the reduced purchases moving forward. Despite the potential impact of rising global oil prices, many countries, such as Australia , have followed suit in the economic sanctions and bans targeting Russia.
However, with half of the EU demand potentially diverted to China , there might still be hope for the Russian oil and gas industries, though we expect the Western world to be less forgiving. Based on the expanded discussions, China expects to increase the future natural gas pipeline capacity from Russia to over 100B cu. meters annually, to reduce its […]
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