Stockmarket’s winners and losers as Russian war shakes the world
Vladimir Putin’s brutal war on Ukraine is chaotically reshaping the global economy, and investors should be prepared to make changes. Here are the potential winners and losers on the ASX.
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Russia’s invasion of Ukraine caused an earthquake in global financial markets, and while the volatility could still get worse it has bred some big investment winners.
Australia’s stockmarket has broadly benefited from the war so far, with five straight days of gains after the February 24 attacks before slipping back on Friday.
As well as the winners, there are large potential losers, and analysts say investors should watch stocks closely. For some companies, the horse has already bolted in terms of stellar share price gains.
Energy stocks have surged in line with booming petroleum prices, with Woodside Petroleum up 15 per cent and Santos up 9 per cent since the attacks began.
Saxo Markets Australian market strategist Jessica Amir said Russia was the world’s third-largest oil and gas exporter and was “essentially cut off from the rest of the world”.
Crude oil prices had surged to $US111 a barrel, their highest level since 2011, Ms Amir said.
“We think the situation could get much worse for the consumer but to the benefit of oil and gas companies,” she said.
“And we think the oil price could get to US$150 if the war in Ukraine gets worse.”
Coal was in a similar situation, Ms Amir said, with Russia a major producer with global supply “already anaemic”.
“The coal price is soaring and Australia biggest coal company Whitehaven Coal is benefiting,” she said. The stock has surged 26 per cent in just over a week.
Miners and grain-related companies are also climbing strongly because of the war’s disruption of commodity markets.
Investment newsletter Marcus Today’s general manager and senior analyst, Chris Conway, said Santos would provide “a good hedge against prolonged conflict and rising energy prices” and he also liked Australia’s biggest company, BHP, which was up 15 per cent in a week.
“Infrastructure spending, particularly on defence and energy security, is likely to increase globally, requiring materials,” Mr Conway said.
“BHP is well placed to benefit,” he said.
MLC Asset Management portfolio manager Anthony Golowenko said mining company IGO was a beneficiary of the current environment.
“Base metal supply, notably nickel, copper, and iron, are also likely to be disrupted as a result of the Ukrainian conflict,” he said.
Another winner has been GrainCorp, which has been hitting record highs, is up 11 per cent in a week and has doubled in the past year.
Russia and Ukraine are both big wheat suppliers and Ukraine’s export terminal has been closed.
Mr Golowenko said GrainCorp was already benefiting from a booming domestic grain harvest and good local growing conditions.
“Global wheat production and more broadly global food production is another area of potential disruption under the current conflict, with elevated prices and volumes benefiting GrainCorp,” he said.
However, stocks like GrainCorp may not have much upside left.
Baker Young managed portfolio analyst Toby Grimm ha recommended selling some GrainCorp shares as “they have had two bumper crops in a row and prices are elevated”.
“From a long-term investment perspective, it’s difficult to see them going spectacularly better than they are at the moment,” Mr Grimm said.
Gold, nickel and aluminium companies were also potential winners from the war but “a lot have already moved”, Mr Grimm said.
“Even uranium stocks are very much back in vogue,” he said.
However, some stocks should struggle if the war drags on, with travel companies facing more challenges after two years of Covid closures, tech stocks looking shaky and others facing higher costs.
Transport and logistics companies could battle to maintain profits if oil prices remained high.
Mr Grimm said Brambles and Amcor had so far been able to pass on higher fuel costs to customers but this could change.
Shares in Qantas, Webjet and Flight Centre have stayed down since their February 24 invasion day fall.
“We benefit from our geographic location – our travel stocks may not be quite as hard hit,” Mr Grimm said.
Mr Golowenko said Webjet could suffer as the reopening of global travel markets, “particularly European markets”, was now more uncertain.
And he could see disruption affecting technology company Appen, making it a “wait and see”.
Mr Conway said tech stocks were potential losers.
“In a high inflation, risk-off environment, high-PE growth names will typically get sold off first and most aggressively,” he said.
Building materials companies such as CSR could struggle too, Mr Conway said.
“Russia supplies 20 to 25 per cent of the world’s softwood lumber. If Russia were to restrict supply that would see further inflation pressures for builders, and therefore margin compression.”
Ms Amir said chicken company Inghams Group could be hit by surging wheat prices.
“It’s going to hurt Inghams and push up their costs massively,” she said.
“They’re Australia’s biggest poultry producer and wheat is the biggest cost of raising a bird. It’s 80 per cent of the chicken’s cost.”
ASX WINNERS
Woodside Petroleum
Santos
BHP
GrainCorp
Whitehaven Coal
IGO
POTENTIAL LOSERS
Webjet
Flight Centre
CSR
Brambles
Amcor
Inghams
Originally published as Stockmarket’s winners and losers as Russian war shakes the world
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