Wall Street banks name the most exposed global stocks to the Russia-Ukraine conflict

Published Thu, Mar 10 20226:53 PM ESTUpdated Mon, Apr 4 20222:16 PM EDT

JPMorgan and Morgan Stanley have named a raft of global stocks with exposure to Russia and the wider region, as investors continue to try to navigate the war in Ukraine. As fighting in Ukraine enters its third week, Moscow's hopes for a lightning war to gain control of the former Soviet republic appears to be dwindling by the day, with some observers now pointing to a protracted conflict. Meanwhile, the Russia-Ukraine war has spilled into the near-term economic narrative as concerns mount over skyrocketing oil prices, rising inflation and a potential slowdown in global growth. "Geopolitical crisis has upstaged what was a very resilient growth backdrop until now, as seen in the record strong labor markets, retreating Covid-19 headwind, and a clear turn for the better in China policy stance," JPMorgan's strategists, led by Mislav Matejka, said in a research note on Mar. 7. But JPMorgan's strategists believe that the conflict has not dramatically transformed the economic landscape, pointing to "resilient" fundamentals and accelerating activity momentum "pretty much everywhere" prior to the conflict. The bank said the euro zone is trading near a record discount to the U.S, with an encouraging regional backdrop while a rise in interest rates could be a tailwind for the region. Meanwhile, the U.S. could be a safe haven in times of geopolitical uncertainty. Moreover, Russia has a "relatively low" fundamental exposure to the global economy beyond commodities, Matejka said. Russia accounts for just 1.7% of global domestic product while the market capitalization of its domestic stock market stands at just 0.4% of the market capitalization of the MSCI World Index, according to the bank's estimates. Stocks with high Russia exposure JPMorgan's screen of stocks with the highest exposure to Russia turned up several stocks with revenue exposure of more than 10%. Topping the list is precious metals mining company Polymetal , which derives 47% of its sales from Russia. The list also includes British steel manufacturer Evraz and Finnish tires manufacturer Nokian Tyres with revenue exposure of 39% and 20%, respectively. French automaker Renault and U.K.-based packaging giant Mondi also have revenue exposure of 19% and 12%. Other companies with significant earnings exposure to Russia include Finnish energy firm Fortum , German energy firm Uniper , commodity trading and mining firm Ferrexpo and Coca-Cola HBC , according to JPMorgan. The bank also compiled a list of U.S stocks with exposure to Russia. The list includes paper company Sylvamo , gold and silver miner Kinross Gold , lightweight metals manufacturer Arconic , tobacco giant Philip Morris , soft drinks titan PepsiCo , flooring manufacturer Mohawk Industries and McDonald's . Morgan Stanley's list Morgan Stanley also weighed in on the impact of the conflict on stock markets. "As Russia/Ukraine tension escalates, there has been increasing concern whether this might impact economic recovery and hence equity performance in Europe," Morgan Stanley strategist Ronald Ho, wrote in a March 4 research note, noting that stocks with high revenue exposure to Europe could face a larger impact. The bank's list of Asia-Pacific stocks with significant exposure to Europe includes Australian toll roads operator Atlas Arteria , with the company deriving 94% of its revenue from Europe. The bank's list also includes several companies with revenue exposure of more than 60% to Europe. They include Japan's largest oil and gas explorer Inpex Corp , Hong Kong infrastructure firm CK Infrastructure Holdings , Indian automotive components manufacturer Motherson Sumi Systems and Australian health care provider Ramsay Health Care . The bank also screened for stocks with direct revenue exposure to Russia. Japan Petroleum Exploration has revenue exposure of 23%, while Indian pharmaceutical firm Dr Reddy's Laboratories and Japanese power tools manufacturer Makita have exposure of 20% and 18%, respectively. CORRECTION: This article has been updated to reflect that U.S. payrolls processing firm Automatic Data Processing is not a company with significant earnings exposure to Russia.

Demonstrators protest against the war in Ukraine in front of the Brandenburg Gate.

Kay Nietfeld/picture alliance via Getty Images

JPMorgan and Morgan Stanley have named a raft of global stocks with exposure to Russia and the wider region, as investors continue to try to navigate the war in Ukraine.