European stocks with business exposure to Russia have lost more than $ 100 billion in market value since the war risks surged. Still, with the impact of sanctions on Moscow remaining uncertain, few are ready to snap them up just yet.

“Nobody knows where these ends and we are in a maximum uncertainty environment that requires a rethinking for most investors,” said Peter Garnry, head of equity strategy at Saxo Bank AS.

From gold miner Polymetal International Plc to tire maker Nokian Renkaat Oyj and Austria’s Raiffeisen Bank International, the selloff of European companies with Russian exposure has been severe. Some stocks have lost three-quarters of their value since February 18, when concerns over a Russian invasion of Ukraine began to take hold. Popular names such as Renault SA and Wizz Air Holdings Plc have also fallen more than 20%.

In that time, a total of $ 100 billion has been wiped off the value of the 22 Stoxx Europe 600 companies that get more than 5% of their sales from Russia. The London Stock Exchange said Thursday it has suspended trading in dozens of depositary receipts for Russian companies “in connection with events in Ukraine, in light of market conditions, and in order to maintain orderly markets.”

The impact on European equities from the Ukraine war doesn’t end there. Oil giants BP Plc and Shell Plc have said they will walk away from Russia, reversing three decades of investment following the collapse of the Soviet Union in 1991. Daimler Truck Holding AG, one of the world’s top commercial vehicle makers, said it will stop its business activities there until further notice and may review links with local joint venture partner Kamaz PJSC.

“Russian assets will get the status of being non-ESG compliant,” Garnry said, highlighting that the popular environmental, social, and governance-focused investment style may prompt investors to shun exposure to geopolitical risks. BP’s decision “will put enormous moral pressure on others.”

The European sector that’s been most affected in the selloff is banks. The Stoxx 600 Banks Index has dropped nearly 20% since a peak on February 10, flirting with bear market territory. Within that, Raiffeisen has been the worst performer by far, losing about half of its market value.

The Austrian lender, which had almost 14 billion euros ($ 16 billion) of outstanding loans in Russia and Ukraine at the end of last year, said on Tuesday that it has halted its dividend for 2021, but that it has no plan to walk away from its business in the region.

Edmund Shing, chief investment officer at BNP Paribas Wealth Management, says banks are one of a number of sectors “where we are in the process of overpricing in risks.”

And Matthew Gilman, a European equity strategist at UBS Global Wealth Management, has a similar view, saying that “a combination of above-trend global growth and falling inflation could quickly make the picture look more favorable for investors.”

Still, there are no signs of bottom-fishing investors yet. Polymetal, which is one of the cheapest stocks in Europe on a multiple of just 1.5 times forward earnings, has seen only a small bounce after plunging to record low.

According to Pascal Blanque, group chief investment officer at Amundi Asset Management, investors seeking “entry points” in many market segments should tread carefully as “repricing and reordering have further to go.”

“We are in the middle of a regime shift characterized by unprecedented inflationary forces not seen in the past five decades,” Blanque wrote, a situation that’s being exacerbated by soaring commodity prices.

Is the worst now priced in? It’s “impossible to say,” according to BNP’s Shing, particularly given the conflict’s indirect impact on economic growth.

© 2022 Bloomberg

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