How will listed companies be affected by the ‘commodities storm’?

Markets started the week with the news about U.S. sanctions on Russia’s oil imports. The daily surge in Brent crude reached 10% while spot gold has exceeded USD 2,000 per ounce. The price of metals such as nickel and palladium broke new records and food prices, particularly of wheat, sharply increased. 

The capital market brokerage company Global Menkul Degerler has evaluated the possible impacts of the surge in commodity prices due to the Russia-Ukraine war on listed companies on the Borsa Istanbul Stock Exchange. 

Global Menkul Degerler said that inflation pressure and cost pressure on companies will be significant with the hikes in commodity prices.

The brokerage firm stated that the inflationist environment will push companies to raise their turnover and investment appetite will increase with the impact of protection from inflation. This may also lead to great differentiation between different listed companies depending on what they produce.

Here is Global Menkul Degerler’s evaluation of the companies that will be affected most by the price hike in commodities such as gold, oil, and wheat: 

>> The surge in gold prices will have a positive impact on the equities of KOZA (KOZA) Group. It will create a positive impact on turnover and profitability in a period when sales volume is weak. 

>> The surge in oil prices will partially affect TUPRAS (TUPRS) adversely due to the cost increase. However, it may also pave the way for a more stable/limited positive impact due to stock profit expectations.

>> The surge in oil prices is parallel to the hike in naphtha prices. That’s why this may create pressure on the profit margins of PETKIM (PETKM). It’s critical where prices end up. The initial impact may be negative as product prices don’t have the same pace as oil prices. 

>> The surge in wheat prices will adversely affect Ulker Biskuvi (ULKER). However, Ulusoy Un (ULUUN) may keep its positive course in the short term. 

>> The acceleration of the hike in coal prices will adversely affect steel manufacturers in terms of their share in input prices. That’s why Eregli Demir Celik (EREGL) and Kardemir (KRDMD) will negatively be affected by the situation.  

>> Although Turkish Airlines (THYAO) and Pegasus (PGSUS) use hedging, there may be a negative move in the aviation industry due to the surge in oil prices. 

>> Raw material prices and oil prices are correlated in terms of movement on the fertilizer side. That’s why the profit margins of fertilizer companies will be negatively affected by the hike in oil prices. Accordingly, the fertilizer manufacturers Bagfas (BAGFS) and Gubre Fabrikalari (GUBRF) will be adversely affected. 

>> The drop in EUR/USD parity may negatively affect the companies with high Europe-based revenues that operate in major appliances and automotive sectors (Ford Otosan, TOFAS, Arcelik, Vestel Beyaz Esya, Vestel, etc.). 

>> TAV Airports (TAVHL) will be positively affected by the decrease in EUR/USD since it added the Almaty International Airport to its portfolio. However, the positive impact may be limited due to market perception.

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