Asia’s shipping stocks and commodities are emerging as safer bets so far, as Russia is a major exporter. A rotation of commodity-heavy Australia and overweight on the energy sector is recommended.
Companies like Japan Tobacco that get a chunk of their revenue from Russia are at risk of lower profits. In Asia, energy and oil producers continued a rally that started last year given economies reopening following the pandemic. Australia’s Woodside Petroleum Ltd. and Santos Ltd., for example, outperformed the broader MSCI Asia Pacific benchmark, which slid about 4% this week. In Malaysia, Dialog Group Bhd was up 1.8%.
Asian shipbuilders and shipping firms are also poised to rally further as European countries may seek seaborne sources of natural gas as tensions escalate. That may mean more business for Korean
shipbuilders including Daewoo Shipbuilding and Marine Engineering Co and Hyundai Heavy Industries Co which were up at least 10% this week.
Food stocks may also gain as Ukraine and Russia account for more than a quarter of the global trade in wheat and a fifth of corn sales. Potential supply disruptions mean emerging market food suppliers will see increased demand, said Nirgunan Tiruchelvam, the head of consumer equity research at Tellimer in Singapore. Shares of companies that count Russia and Ukraine as their end markets have plunged.
Russia-based United Co Rusal International’s shares slumped 22% in Hong Kong this week. The
company gets about a fourth of its annual revenue from Russia. Ukraine’s status as a major producer of neon gas - used in semiconductor manufacturing - and the UK’s ban on hi-tech exports to Russia have made chip makers vulnerable at a time when pandemic-induced disruptions were already weighing on the supply chain. Bank stocks are also on the traders’ radar amid stiffening Russia sanctions given some of the lenders’ exposure to the country.
