Contrary to Putin’s forecast on June 9, Western companies have increased their capitalization since leaving the Russian Federation and have benefited from the severing of ties with Moscow.
Western companies continue to leave Russia. In early June, Putin promised that foreign companies that left the Russian market would regret their decision, but the real picture refutes the words of the head of the Kremlin and Russian propaganda: leaving the Russian Federation has brought to a significant increase in the asset value of most companies.
“They will regret it because Russia is a country with great potential, really. Many regret having to leave. This is all a manifestation of the internal state of these countries that cannot make sovereign decisions,” Putin said in June.
In some cases, they have risen in price by a third all at once.the study shows “Agencies“.
Many have remained profitable, despite billions in write-offs due to the sale of assets in the Russian Federation.
Economists note that after the Russian army’s invasion of Ukraine, the Russian Federation has become a supertoxic state with a negative reputation as an occupying country, any ties with which cause harm to foreign companies and brands.
For analysis, the journalists took the Forbes rating of the largest foreign companies in the Russian Federation and added to it some state-owned companies that are important for their industries.
“We obtained a list of 17 large foreign public companies that had significant assets in the country and were able to sell them. We compared the capitalization of these companies at the time of the sale of the Russian business and on November 7,” – noted in the message.
Of the 17 companies, only four have seen their corporate value decline: automaker Nissan, Italian energy company Enel, appliance maker Whirlpool and Canadian gold miner Kinross. The capitalization of most of the companies has grown, one (clothing retailer Inditex) has not changed. The average growth in the capitalization of companies whose quotations rose was 14.7%.
All of the companies on the Agency’s list, except Imperial Brands and Kinross, recorded asset write-offs, provisions and other losses in Russia. The total amount of company deletions from our list reached $20.3 billion. But at the same time, only three reported a loss in the third quarter: Renault, Ford and Baker Hughes. The rest (of those who have already published reports) after leaving Russia received profit for the third quarter of 2022. Ten companies also reported profit for the first 9 months.
The growth leader in terms of capitalization is the French auto giant Renault, which before the war was one of the largest investors in the Russian economy and, after the outbreak of war, one of the first to leave Russia. It divested its assets – a plant in Moscow and a stake in AvtoVAZ – in mid-May, since then its shares have grown by 34%, or about 2.3 billion euros.
Shares of almost all other foreign automakers that have left Russia (Ford, Toyota, Mercedes). has increased in price. The exception is Nissan, its capitalization has decreased. But the capitalization of Hyundai, which has not yet managed to sell its St. Petersburg car plant, fell 2%.
In second place in terms of capitalization growth is an oil services company Halliburton, having risen in price by 33.5%, or by $9 billion. This company, which has drilled and serviced wells of Russian oil producers, wrote off $366 million due to curtailed operations in Russia.
In third place is a cigarette manufacturer Imperial Markswhich has increased in price by 30% (about $6.2 billion).
Oleg Itskhoki, a professor of economics at the University of California at Los Angeles, says that the growth in the capitalization of companies that have left the market may be associated with their complete exit from Russia.
“The market treats these companies’ Russian assets as their liabilities (liabilities – ed). It is possible that the presence in Russia creates problems and risks for the core business in Europe, both through regulators and through consumers and financing”, said Yitzchoki.
Since the start of the Russian military’s invasion of Ukraine, hundreds of foreign companies have announced the reduction of operations in the Russian Federation, from cessation of trade to sale of assets. At the same time, automakers and consumer goods makers were allowed to sell assets, while banks, oil producers and a number of fuel and energy companies were banned from doing so until an order Putin’s special.
Note that in support of the fact that Western sanctions are working, the current panic in the Russian Federation in the oil industry claims. Russia at an emergency pace rush to sell oil before it’s too late.
Earlier, Bloomberg found that Russia has found a way evade sanctions US and EU. She is assisted in fraud by two CIS countries at once – Kazakhstan and Armenia.
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