Monday’s market action proves plenty of exchange traded funds are vulnerable to the crisis in Ukraine and the list is not confined to Russia ETFs.
Emerging markets bonds ETFs with exposure to Russian and Ukraine debt traded lower Monday with as the ruble fell to a record low against the dollar. Equity-based energy ETFs were also pinched as were diversified ETFs heavy on European oil giants as BP (NYSE: BP), Royal Dutch Shell (NYSE: RDS-A) and France’s Total (NYSE: TOT) are among oil companies with exposure to Russia. [Non-Russia ETFs Wilt as Ukraine Tensions Rise]
One ETF that could be a beneficiary of an extended Russia/Ukraine conflict is the Market Vectors Agribusiness ETF (NYSEArca: MOO). Although MOO closed slightly volume Monday, volume was more than triple the daily average, indicating the despite the higher-than-normal turnover, sellers could not inflict much damage on the fund.[ETFs for a Potash Recovery]
Potach Corp. of Saskatchewan (NYSE: POT), Mosaic (NYSE: MOS), CF Industries (NYSE: CF) and Agrium (NYSE: AGU), each among the largest producers of crop nutrients in the world, all finished higher Monday on speculation the ongoing Russia/Ukraine imbroglio could constrain global potash supplies.
“Non-Russian potash supplier…may benefit from a potential trade sanctions that could impact Russian potash exports,” Robbert van Batenburg, director of market strategy at global brokerage firm Newedge, told the Wall Street Journal.
Companies such as Potash came under pressure earlier this year after Russian fertilizer giant Uralkali agreed cut its potash price to China by 24%, selling the soil nutrient for $305 per ton for the first half of 2014.
Uralkali quit the Belarusian Potash Company in July 2013, but there is talk of a reunion. Still, economic sanctions against Russia could open the door for MOO holdings to benefit.
The four aforementioned stocks combine for 20% of MOO’s weight. Uralkali is almost 2% of the $3.8 billion ETF’s weight.
Market Vectors Agribusiness ETF
ETF Trends editorial team contributed to this post.
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