Many dividend companies have operations outside the state where their headquarters is, even outside the country where they reside or outside the US. They have operations which have been built up over the years and the current management likely inherited the operations. From a corporate perspective, as long as the operations are profitable, the company benefits. A number of years ago, when the Soviet Union broke up, many companies moved into the new countries because there were previously markets which could not be reached.
In the world, things change and sometimes they seem to stay the same. In the case of the Soviet Union, the countries changed and became independent. Russia which is blessed with natural resources, uses the resources to influence and dominate the independent government. If a company has operations in the former Soviet Union analyzing what Russia is trying to do or is doing is a key to continuing success.
In an article by Tom Arnold, Natalia Zinets, and Karin Strohecker of Reuters, Russia has built its military near the Ukraine border. It could be something or it could be nothing but it has an affect.
Aberdeen Standard Investments, with over $640 billion in assets under management, reduced some ruble exposure but remains exposed to Russian and Ukraine bonds. At the moment, Viktor Szabo, portfolio manager said we know that occupying and rebuilding Donbass would come at an extremely high cost for Russia in terms of financials, in terms of lives and in terms of sanctions.
JPMorgan moved to market weight from overweight on Russian local bonds and the ruble. Trim Capital portfolio manager Peter Kisler said he started to build a short position on Russia.
Jupiter Asset Management sold its holdings of Ukraine’s GDP warrants when the news begin to surface. Ukraine is expected to pay $40 million in May based on 2019 GDP growth of 3.2%.
International fund manager including Jupiter and BlueBay have built up defensive positions. If Russia invaded Ukraine, they would quickly exit the positions.
Linking to dividend paying stocks, diversification can be a wonderful thing as long as there is stability. Once there is less stability the first reaction is begun defensive to protect the capital, if conditions change for the worst exit quickly and be on the sidelines and when stability returns find buying opportunities at lower prices. You can do the same for your investments, ensure most of your investments are in countries that are stable and monitor.
There are more questions than answers, till the next time – to raising questions.