More than 100 listed UK companies sound alarm as Ukraine war makes investors move away from shares to gold
115 UK listed companies have now warned of the effects of the war in Ukraine in their stock exchange announcements.
The number of companies warning of the risk the situation in Ukraine poses has risen almost fivefold in the past week, up from 20 the week before.
So far few have quantified the impact on their earnings, but companies which have warned of a direct impact on their operations include several FTSE 100 firms such as BP, Shell, JD Sports, British American Tobacco and Imperial Brands.
Of the 115 companies, over half (59) have warned of a negative impact specific to their operations in the region, while 47 have warned of heightened macroeconomic risk generally as a result of the situation, according to data from Bowmore Asset Management, shared with CityAM this morning.
The firm said the challenge for businesses and their finance departments now is to give shareholders a better understanding of what the actual financial impact of this crisis is going to be under different scenarios.
Increasing concerns over the effects of the war in Ukraine over the last few weeks has caused a significant shift from risk assets into ‘safe haven’ assets. Gold has recently surged to over $2,000 an ounce, whilst global equity markets recently endured their worst week since the sell-off in March 2020.
The investor explained that, although markets have fallen, lower share prices can provide opportunities for deploying investable cash at a more attractive level for investors with a suitable risk appetite and longer time horizons.
It t is more important for investors to take into account longer-term issues such as corporate revenue growth, employment growth, consumer spending and the condition of household balance sheets, the firm stressed.
Positive impact
Whilst every company with a stock exchange announcement on Ukraine has made it clear they empathise with the devastating human impact of the conflict, nine companies have referenced a small positive impact on their business.
For example AIM-listed mining company Ferro-Alloy Resources, based in Kazakhstan, explained how the sharp decline in the Russian rouble and Kazakhstani Tenge has significantly reduced its operating costs.
In addition, some investment trusts listed on the London Stock Exchange have referenced how the situation in Ukraine has accelerated the trend of rising commodity prices, which may feed into better investment returns.
“Whilst inflation is going to put pressure on UK consumers, household finances have left the Covid crisis in surprisingly robust condition.”
Jonathan Webster-Smith
Jonathan Webster-Smith, Chief Investment Officer at Bowmore Asset Management, explained to CityAM today that “while the conflict has caused a significant sell-off in the stock market, we believe investors with a long-term horizon should not panic at the volatility that we are seeing within global markets, which are dislocated from fundamentals at this time.”
“Investing for the long-term means trying to look beyond the headlines and predict how the crisis will impact data and corporate results and trends over the coming year.”
“Some shares that may be more heavily sold could present real opportunities to buy at significantly lower levels. Despite what the reaction of markets would lead investors to believe, good companies do not become bad companies overnight,” Webster-Smith concluded.