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ZERO HEDGE reports:

Now that military action in Ukraine is reality, a development which has caught much of the market by surprise, investors are digging through the data to uncover which companies are most exposed to the deadly escalation in Ukraine.

The good news is that for the most part, corporate exposure to Russia/Ukraine is limited and focused in a handful of sectors (mostly commodities and energy). Despite the relatively low exposure however, energy costs are at the heart of the Fed’s anti-inflation crusade, and as JPMorgan writes, the Russia/Ukraine crisis could force a reassessment of the Fed tightening path resulting in central banks turning less hawkish, while policymakers may consider additional fiscal stimulus (e.g. US gas tax reduction).

That said, Russia is a major producers of PGMs, nickel, aluminium and diamonds In 2021, Russia accounted for: ~35% of global palladium mine supply, ~10% of platinum, ~6% of primary aluminium, 7% of nickel, 4% of copper and ~30% of rough diamonds. 

Metal prices have already reacted to the risk of supply disruptions, but sanctions on exports on any of these  metals/commodities could send prices even higher; global visible inventories are already depleted meaning metal prices will respond quickly to any supply shocks. Russia’s importance to the global autos industry is particularly high (platinum and palladium) and the recent experience of sanctions on major aluminium producer Rusal in 2018 show the potential disruption effects on global supply chains…

To read the full post – which includes Russia-Ukraine outperformers (with indirect exposure) and Russia-Ukraine underperformers (with direct/indirect exposure) – please click here.

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