Event: on February 24, the military conflict between Russia and Ukraine broke out in an all-round way, which triggered sanctions against Russia by western countries such as Europe, America and so on. At present, the sanctions measures cover finance, high-tech exports and other aspects, especially the proposal to exclude Russia from the swift system and sanction the Central Bank of Russia, which attracted global attention. However, the sanctions currently do not include energy import and export.
Sanctions may have a serious impact on the Russian economy, depending on the details of implementation.
The sanctions are mainly divided into two aspects: first, financial sanctions, including sanctions against the Central Bank of Russia and excluding major Russian banks from the swift system, mainly aimed at Russia's overseas financing and financial settlement capacity; Second, for high-tech imports, making it unable to obtain high-tech equipment, involving military, biotechnology, aviation, semiconductor and other fields, which may affect the industrial development of Russia, and concentrated in the field of high-end industries, and the overall impact is not "fatal". We expect that the sanctions may have a serious impact on the Russian economy. At present, the relevant details of the sanctions have not been released, and the specific degree still depends on the implementation details. However, the sanctions exclude Russia's energy exports, and Russia's economic development is highly related to international energy prices. Therefore, so far, the negative impact of sanctions on the Russian economy is generally within its tolerable range.
\u3000\u30001. Financial sanctions focus on three aspects. In recent years, Russia has actively responded to sanctions, transformation and change, but this time it is stronger than ever, or it may cause more serious harm to the Russian economy, depending on the implementation details. The sanctions focus on three aspects: first, freeze the overseas assets of Russian financial institutions and cut off their overseas financing capacity, so as to crack down on China's economic development; Second, impose sanctions on the Russian central bank, significantly reduce its support for financial institutions and real enterprises, crack down on the ruble exchange rate and raise its inflation level in China; Third, the exclusion of major Russian banks from the swift system will affect their overseas clearing capacity. However, the scope of exclusion has not been determined, and it is clear that the energy settlement will not be affected temporarily, so the actual impact needs to be evaluated. In recent years, in the face of European and American sanctions, Russia has taken measures to actively respond. In fact, since 2014, Europe, America and other countries have adopted similar sanctions, which had a great impact on Russia at that time. However, after years of sanctions, Russia has taken measures to actively respond; First, taking advantage of the high oil price, we have accumulated a large amount of foreign exchange reserves, which has reached the level of more than 600 billion US dollars; Second, actively reduce the amount of China's foreign debt and reduce the level of government debt; Third, reform the exchange rate system from the linked exchange rate system to the floating exchange rate system. And repeatedly raised interest rates in an attempt to stabilize the ruble exchange rate; Fourth, for swift system, Russia has established its own payment system and financial information exchange system (SPFS) in 2015, and actively joined China's RMB cross-border payment system (CIPS); Fifth, it sold almost all US dollar assets to minimize the chips in the hands of the United States. However, although Russia has made a lot of preparations, the sanctions against Russia involve kicking out the swift system and the Russian central bank, with more strength and impact than in the past, or causing more serious harm to the Russian economy, depending on the implementation details of the sanctions. Under more serious circumstances, it may trigger a tide of Bank Of China Limited(601988) run in Russia and cause high inflationary pressure in China.
\u3000\u30002. High tech sanctions involve military, biotechnology, aviation, semiconductor and other fields, which may affect the industrial development of Russia, and are concentrated in high-end industries. The overall impact is not "fatal". Europe and the United States and other countries mainly restrict Russia's imports of high technologies such as military, biotechnology, aviation and semiconductors. On the one hand, high-end technology intensive products account for about 29% of all Russian imports. European and American sanctions may have an impact on Russian industrial development. On the other hand, since 2014, the impact of European and American trade sanctions on Russia has been passivated, and Russia has formed a certain immunity. Even if the sanctions are strong, the impact on the Russian industrial system or concentrated in high-end industries, the overall impact is not "fatal". After 2014, Russia has taken the initiative to reduce the proportion of its imports from the EU and the United States. In addition, among Russia's major import and export cooperation countries, Germany is the main importer except China, and Germany is extremely dependent on Russia for energy. Therefore, the final coverage and effect of sanctions remain to be seen. At the same time, considering that Russia has experienced sanctions for many years, its Chinese industrial system has been immune to it. After the sanctions, the government is expected to have a lot of subsidies. Even if the scope and duration of sanctions are strong, the impact on the Russian industrial system may be concentrated in high-end industries, and the overall impact is not expected to be "fatal".
\u3000\u30003. Russia's economy is extremely dependent on energy exports, and its economic development is closely related to international energy prices. At present, international energy prices are at a high level, which restricts the strength of European and American energy sanctions against Russia. Therefore, the negative impact of the current sanctions on the Russian economy may be within its tolerable range. An important reason why the last round of large-scale sanctions in Europe and the United States had a great impact on the Russian economy was that at that time, the international oil price went down all the way, which led to the collapse of the Russian economy. However, at present, the relationship between international energy supply and demand is tense, and prices are easy to rise but difficult to fall. Energy sanctions against Russia may push international energy prices skyward, especially for Europe, which can be described as "mutual destruction". So far, the European and American sanctions are still limited to finance and high technology, and the sanctions on energy are not involved. Therefore, the sanctions do not involve the fundamental item of energy export. We expect that the negative impact of the sanctions on the economy may be within Russia's tolerance.
The sanctions will impact the EU economy to a certain extent. We need to pay attention to whether the follow-up involves the impact of energy sanctions and related industrial chains.
In addition to Russia and Ukraine, the EU has suffered the most from the escalation of sanctions. EU countries rely on Russian energy and crop imports, and anti sanctions measures may affect the EU economy and drag down global demand; The supply shortage of non-ferrous metals and inert gases in Russia and Ukraine may affect the industrial chain of semiconductors and electric vehicles.
\u3000\u30001. Shenzhen Agricultural Products Group Co.Ltd(000061) prices may rise. If the sanctions are extended to energy, the European economy will decline, dragging down foreign demand. First, the Shenzhen Agricultural Products Group Co.Ltd(000061) price may rise. Russia and Ukraine are the world's major producers of wheat, corn, vegetable oil, oilseeds and other crops. China's production reduction caused by war and sanctions may drive the prices of Shenzhen Agricultural Products Group Co.Ltd(000061) and other commodities.
Second, it may impact the trade between Russia and Europe and the supply of raw materials to Europe. If the scope of sanctions is extended to energy, it will drag down the European economy and even global demand. Russia is the fifth largest trading partner of the EU. In 2020, the trade volume with Russia accounted for 4.8% of the total goods trade between the EU and the world. In 2020, the total trade in goods between the EU and Russia was 174.3 billion euros. EU imports amounted to 95.3 billion euros, mainly fuels and minerals - especially oil (70.6%), agriculture and raw materials (4.5%), chemicals (4.3%) and steel (4.1%). EU exports totaled 79 billion euros, mainly machinery and transport equipment (44.1%), chemicals (21.1%) and manufactured goods (9.6%) and agriculture and raw materials (8.7%).
Referring to historical experience, the anti sanctions adopted by Russia in 2014 include the prohibition of the export of Shenzhen Agricultural Products Group Co.Ltd(000061) and food to the United States and Europe. Russia is likely to take corresponding anti sanctions this time, which may have an impact on the trade and raw material supply in Europe. If the scope of sanctions is further expanded and involves energy, the spillover effect of the rise in global energy prices after the closure of swift to Russia will have an impact on the economies of European countries. According to the IMF, the nominal GDP of European countries accounts for about 24% of the world (as of the third quarter of 2021). If there is a significant decline in the European economy, it will have a drag effect on global demand.
\u3000\u30002. In terms of the impact on the industrial chain, the raw materials of the high-end manufacturing industrial chain may be impacted by the shortage of supply. If Russia takes metal export as a counter measure, it may have an impact on the European and American electric vehicle and intelligent equipment industry chain in the medium and long term; If there is a shortage of inert gas in Ukraine, it may aggravate the global "core shortage". Russia and Ukraine are both major exporters of metals and chemical raw materials. Russia is a major producer of nickel, palladium and copper, with global production shares of 37%, 9.26% and 3% respectively. Nickel is the key raw material of electric vehicle battery, while palladium is used in automobile catalytic converter, smart phone, sensor, memory, electrode and so on. The sanctions will trigger the expectation of supply shortage of some non-ferrous metals, or drive their prices. In a pessimistic situation, if Russia takes anti sanctions measures and takes metal exports as a counterattack against western countries, it may have an impact on the European and American electric vehicle and intelligent equipment industry chain in the medium and long term. Ukraine is the world's largest supplier of neon gas, accounting for about 70% of the global share 1. High purity neon gas supplied by Ukraine is an indispensable raw material for the production of semiconductor chips. The supply shortage of inert gas may aggravate the global "core shortage" situation and affect the semiconductor chip industry chain.
