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Which companies could be affected by the Russia - Ukraine crisis?

Sanctions have been announced against Russian banks and individuals, but the economic repercussions will be felt much more widely.

Dmitriy Chistyakov reacts to a mistake wearing the colours of Zenit, a club sponsored by Russian gas gaint Gazprom.
Anton VaganovReuters

With the announcement that Russia was recognising the independence of two Ukrainian provinves, Donetsk and Luhansk, NATO and the EU announced a swathe of sanctions aimed at curtailing the financial power of the Russian government. Businesses, football clubs, and individuals will be affected by the limitations.

These will be the first businesses to be directly impacted, but further escalation would lead to a greater economic fallout that will affect much more than regional businesses; another global economic meltdown could be likely as the supply chain is disrupted further after two years of financial misery.

Businesses affected directly

At this stage, the most pressure is upon Russian banks that have been hit with US sanctions. 12 banks have been singled out, with two major banks being prevented from raising new western capital. These sanctions were announced to be the first wave depending on Russia's aggresiveness. The UK and the EU have also placed their own sanctions of varying strength on Russian businesses, hoping to put the squeeze on President Putin and his associates.

In the most serious scenario for Russian businesses they could be forbidden from making transactions in European and American markets. For giants like Rosneft, Gazprom, and Lukoil, this would be very serious as they all have listings in London, despite their main stock listings being in Moscow. The three combined paid $42 billion in taxes to the Russian government in 2021, nearly funding all of Russia's defence budget between the three of them.

In a case of war, Ukrainian businesses would be under huge stress, especially if they found themselves in the line of fire. It would be an untenable situation.

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Businesses affected indirectly

While Russian businesses are being directly targeted, the result will be economic problems for many other businesses outside of the conflict zone. The world is a very interconnected place, and the pandemic has proven that disruptions in the global supply chain have big repercussions for a long time.

Aside from sanctions, war has a negative effect on the operation of nearly businesses. Supply chains are disrupted, stocks fall, and the insecurity generated by war prevent investment. During the last war between Russia and Ukraine in 2014, the Russian stock exchange plummetted 10 percent in a single day, while Germany's DAX had its biggest drop since the Eurozone crisis two years prior. All businesses would suffer in case of war, and larger decreases could be expected if the conflict escalated into a general conflict. 

The only businesses which would benefit are those you would expect; arms manufacturers. Despite nearly all stocks tumbling in the last week, US companies like Raytheon have had considerable growth of nearly 10 percent in the last month, while other prominent companies like Tesla have seen their stock price fall from $963 to $764 in the same period. Weapons manufacturers thrive off war, and the chance to sell American wepaons will have investors interested.

For all other businesses, prepare to brace. 2022 is not looking a promising year for economic recovery after the pandemic.