The recent sharp fall in oil prices, coupled with western sanctions, has further exacerbated the economic crisis in russia and has been accompanied by repeated devaluations of the rubles. What does the collapse of the ruble mean for russian trading partners, whether state or business
If the russian economy breaks apart, no one will be left alone. An analysis by cnn concluded that european countries, energy enterprises, automobile manufacturers and so on would be the greatest victims。
European states
In august this year, in retaliation for western sanctions, moscow began banning the import of fruits, vegetables, meat, fish and dairy products from europe, the united states, australia and canada。
This is not good news for european producers who previously exported large quantities of fruit, cheese and pork to russia. Last year, about 10 per cent of eu food exports (valued at about $15 billion) were destined for russia, making russia the second largest customer in europe. To this end, europe has allocated approximately $156 million to compensate these producers。
Take germany, for example. Trade between germany and russia exceeded $954 billion last year. The harsh sanctions imposed by the west as a result of the crisis in ukraine had seriously affected german exports to russia, and businesses had stopped investing。
In september of this year, factset analysed the degree of dependence of european countries on russia and stated in its study that austria, finland and poland were the most dependent countries of russia, where companies accounted for 7. 4 per cent, 6. 2 per cent and 5. 6 per cent of total income, respectively. In addition, european countries with wider open markets, such as the netherlands, the united kingdom, germany and france, also rely on russia for 5. 3 per cent, 4. 0 per cent, 3. 4 per cent and 3. 2 per cent, respectively。
China
Butterfly effects of the luble crash are also transmitted to china. At the border crossings between russia and china, the decline in the number of russian tourists, the decline in exports of small household electricity and light-swidth products, etc., is beginning to occur, and the tourism and trade sectors are suffering from cold conditions。
Wang yun gui, director of the general division of the state foreign exchange administration of china, said on thursday that the devaluation of the rouble had had no significant impact on china's cross-border financial flows, but would follow closely the fall of the rouble, and called on chinese enterprises with business contacts with russia to use foreign exchange forwards, swaps and other financial instruments to control risk。
It was also argued that the fall of the ruble would have a greater impact on the chinese-russian currency swap agreement. In october, the central bank of china and the russian federation signed a bilateral exchange agreement of rmb 150 billion and rmb 81. 5 billion. With the continued rapid devaluation of the ruble, the use of the ruble’s financial transactions with russia would be a hot potato, and the rubles in hand would soon face devaluation。
Energy enterprises
Bp warned that severe sanctions would result in corporate losses. Bp owns a large share of the russian oil company rosneft, the largest oil company in russia, and is also on the united states trade ban list. The company's share price has fallen by 25 per cent since this year as a result of the sharp drop in oil prices。
The plans of the french oil company total to establish a shale drilling joint venture with the russian oil company lukoil, which was also delayed by western sanctions, have also led to a significant erosion of the company's potential future earnings. Oil companies like exxon mobile are also inextricably linked to russia。
Automobile manufacturer
Ford, the united states car giant with a large business presence in russia, has issued a warning that the fall in the ruble will undermine company performance. The german public (volkswagen) attributed the 8 per cent decline in car sales in the first half of the year to the tense political situation, which has cumulatively fallen by more than 12 per cent since this year。
Renault, france, claims that it sells less in russia than before; peugeot citroen, too, stated in october that the rouble devaluation would drag down the company。
Tesla was also affected by the decline of $1 billion in half a month in the wealth of alan musk, founder of tesla and chairman of solarcity, a photovoltaic company. In earlier reports, the interface noted that this was due to low oil prices that reduced the demand for electric cars and solar power systems, thus lowering the stock prices of tesla and solarcity。
The chinese national car producer, gilly, also announced that the net profits in 2014 were expected to fall by about 50 per cent in the same year, owing to losses on foreign exchange in russian operations and a decrease in car sales。
Not only gilly, the russian market has now become an important position for chinese-owned cars. According to aca, a dozen brands, such as gilley, the great wall and biadi, are now selling the whole car in russia. As of november 2014, the total sales of these branded cars in russia had decreased by about 19. 3 per cent compared to the same period last year。
Consumer goods industry
In august of this year, the regulatory bodies forced the temporary closure of several mcdonald's restaurants in moscow, alleging violations of health regulations. It was suggested that the cold relationship between the united states and russia was one of the main reasons behind the matter。
As a result of tensions that hit consumption and the devaluation of the ruble eroded profits, the german garment company adidas was closing its russian branch and slowing down its expansion. The company also reduced the expected revenue in 2014 by 20 to 30 per cent, in part because of russia。
Coca-cola was also hit. The stock price of coca-cola hbc, the world's second largest bottling plant under the coca-cola flag, fell by 32 per cent, and the plant bottled and distributed drinks in russia。
Finance
In the second quarter, the profits of the russian branch of the banque français declined by 36 per cent. There are also significant risk exposures at rabobank and unicredit。
Dealers and investors in the currency options market were caught by the rouble crash. The pacific investment management corporation (pimco) faces huge losses because of its russian bonds, and almost all the increased ruble options contracts have become worthless. Foreign exchange brokers in new york and london also informed their clients that they would no longer conduct rubles。
According to bloomberg-related data, at the end of september, the pacific investment management corporation still held $803 million in russian corporate and sovereign debt, accounting for 21 per cent of total assets. In the past month, the fund has lost 7. 9 per cent。
Fxcm, the world's third largest diaspora provider of foreign exchange services, will also terminate rouble-to-dollar services and begin closing down customer transactions。
