Goldman Sachs has named a raft of global stocks it expects to benefit as governments react to the escalating conflict between Russia and Ukraine. Russia launched an unprecedented invasion on Ukraine last week, sending shockwaves through financial market and raising fears of a crushing humanitarian crisis. But despite the near-term risks for Europe, Goldman strategists said on Feb. 25 that they remain optimistic about the region's stocks and "see this conflict as largely one that raises the risk premium rather than derails the recovery." Against this backdrop, Goldman is advising investors to increase exposure to stocks set to benefit from increased spending on infrastructure. The bank has a basket of stocks which it says have exposure to fiscal infrastructure spending. The list comprises of companies from a variety of sectors, including chemicals, construction and materials, industrials, technology, telecommunications, and utilities. "[Our] fiscal exposure baskets ... should benefit as governments likely will need to increase fiscal spend on defense and Energy security," Goldman strategist Sharon Bell said. Goldman's picks in the chemicals sector include Air Liquide and Covestro , while its top picks in the construction and materials space include Sika , Gerebit, Kingspan , Assa Abloy and Rockwool . Within the industrials sector, the bank likes Siemens , Schneider Electric , Safran, Atlas Copco , ABB and Schindler . The bank also likes SAP , Capgemini and Netcompany within the technology sector, while telecommunications stocks such as Deutsche Telekom , Swisscom , Telia and Infrastrutture Wireless made the basket too. Rounding off Goldman's list are utilities stocks that include Orsted, EDP Renovaveis , Verbund , RWE and Iberdrola . Energy and healthcare Goldman also likes energy stocks in the current environment, describing the sector as "inexpensive" and a "good hedge" against prolonged conflict and rising energy prices. Healthcare is another of the bank's top sectors, with Bell liking their defensiveness, given their high-single-digit sales growth and low sensitivity to inflation. The sector also trades cheaper than most other defensives, she added. 'Optimistic' about European stocks Goldman said it continues to see value in European stocks, despite the ongoing uncertainty. "While our economists believe GDP is likely to take a modest hit from higher energy costs and a slight tightening in financial conditions, we would argue the market is already conservatively pricing growth," Bell wrote. The bank noted that European companies are also buying back shares at a faster rate than at any point since the global financial crisis, buoyed by their strong balance sheets. "This, together with good underlying economic growth, improving labor markets, and high savings ratios for households means we remain optimistic about European shares," Bell added.
Ukrainian servicemen are seen next to a destroyed armoured vehicle, which they said belongs to the Russian army, outside Kharkiv, Ukraine February 24, 2022. REUTERS/Maksim Levin TPX IMAGES OF THE DAY
Maksim Levin | Reuters
Goldman Sachs has named a raft of global stocks it expects to benefit as governments react to the escalating conflict between Russia and Ukraine.