Stocks Punished for Russian Connection on Ukraine Crisis

Companies dependent on Russia tumbled as escalating tension in Ukraine and the threat of U.S. sanctions on its Cold War adversary rattled investors.

Societe Generale SA (GLE), the foreign bank with the largest branch network in Russia, sank the most in a year. Carlsberg A/S, owner of Russia’s biggest brewer, posted its biggest drop since February 2013. In North America, Imax Corp., the Canadian big-screen cinema company that’s expanding in Russia, lost 2.4 percent at 3:09 p.m. in New York, while Rowan Cos., a U.S. contract-drilling services provider, slid 1.9 percent.

Ukraine warned that Vladimir Putin’s military is strengthening its presence in Crimea amid the worst standoff between the West and Russia since the Cold War ended. Western diplomats are seeking to calm tensions, with U.S. Secretary of State John Kerry arriving in Kiev tomorrow. The Stoxx Europe 600 Index fell the most in more than a month, and the Standard & Poor’s 500 Index lost 1 percent.

“The complex situation in Ukraine brings potential for heightened volatility in the near term amid concerns of an escalation into a wider conflict,” said Alan Higgins, who helps manage about $50 billion as chief investment officer for the U.K. at Coutts & Co. in London.

Ukraine has mobilized its army and called for foreign observers after Russian forces took control of Crimea, where ethnic Russians comprise the majority.

Stocks Retreat

The Stoxx 600 dropped 2.3 percent today after reaching a six-year high last week. The VStoxx Index, which tracks the cost of Euro Stoxx 50 Index options, surged 30 percent, the most since August 2011. The S&P 500 closed at a record Feb. 28.

Societe Generale, France’s second-largest lender, fell 5.4 percent to 45.75 euros. Raiffeisen Bank International AG (RBI), the Austrian bank that owns the biggest foreign lender in Ukraine, lost 9.6 percent, the most since September 2011, to 22.84 euros.

Carlsberg, which got 27 percent of its sales from eastern Europe last year, declined 5.3 percent to 540.50 kroner.

Nokian Renkaat Oyj lost 6.6 percent to 30.35 euros. The Nordic region’s largest tiremaker got about 35 percent of its revenue from Russia and the Commonwealth of Independent States in 2012, according to data compiled by Bloomberg.

Metro AG retreated 5.4 percent to 28.41 euros. Eastern Europe accounted for 26 percent of its sales in 2013, the data show. Germany’s biggest retailer said in January that it will proceed with a partial initial public offering of its Russian Cash & Carry unit in the first half of this year.

ITE Plunges

ITE Group Plc (ITE) sank 13 percent to 244.8 pence. The organizer of exhibitions and conferences earned 63 percent of its revenue from Russia last year. About 30 percent came from eastern and southern Europe, central Asia and the Caucasus.

Imax dropped 2.4 percent to C$28.89. The company received 7.1 percent of its 2012 sales from Russia and the Commonwealth of Independent States, data compiled by Bloomberg show. Rowan Cos. slid 1.9 percent to $32.72 as Northern Europe contributed to 35 percent of its revenue.

In Asia, Dr. Reddy’s Laboratories Ltd., an Indian drugmaker that counted Russian regions for about 15 percent of its sales in the latest fiscal year, slipped 2.8 percent to 2,815.55 rupees. China Machinery Engineering Corp., a power plant builder that got almost 9 percent of its revenue from Belarus, declined 2.7 percent to HK$5.52.

To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net; Lu Wang in New York at lwang8@bloomberg.net

To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net

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