Russia’s Lukoil To Terminate ADR Program

Posted by David Hunkar on 13 May 2022, 3:21 am

Russian energy giant Lukoil(LUKOY) has announced plans to terminate its ADR program. In addition, the firm will also cancel its listing on the London Stock Exchange as well effective June 6, 2022. This is a big blow for American and foreign investors in Lukoil. However this is not a surprise since Russian passed a law in April, 2022 which banned the trading of domestic companies shares on foreign markets.

Below is the press release from the company site:

ON DEPOSITARY RECEIPT FACILITIES OF PJSC LUKOIL
Thursday, May 5, 2022

PJSC «LUKOIL» (hereinafter, the “Company”) announces that the recently enacted Russian Federation law (Federal Law No. 114-FZ of April 16, 2022 (the “Law”)), prohibits circulation outside of Russia of depositary receipts representing shares of Russian issuers, effective April 27, 2022. The Law requires Russian issuers to initiate termination of their depositary receipt facilities.

In accordance with the Law and the terms and conditions of the Company’s American Depositary Receipt (hereinafter, “ADR”) facilities, the Company advised Citibank N.A. of its intent to terminate its Level 1 ADR facility and Rule 144A ADR facility, effective December 30, 2022.

The Company also notified the FCA and the London Stock Exchange of its intent to cancel the listing and admission to trading of the ADRs (ISIN US69343P1057 and ISIN US69343P2048) and ordinary shares of PJSC LUKOIL (ISIN RU0009024277), effective June 6, 2022.

ADR holders may convert their ADRs into ordinary shares of PJSC «LUKOIL» by December 30, 2022. Only persons who held ADRs as of April 27, 2022, are eligible for conversion of their ADRs into ordinary shares of PJSC «LUKOIL».

Source: Lukoil

Here is an article from Interfax:

MOSCOW. May 5 (Interfax) – Lukoil has sent notices to request terminating the listing of its ADR programs and the listing of the company’s shares on the London Stock Exchange, the Russian oil company said in a statement.

Lukoil said that, in accordance with the recently enacted Russian law prohibiting circulation outside of Russia of depositary receipts representing shares of Russian issuers, it had advised Citibank N.A. of its intent to terminate its Level 1 ADR facility and Rule 144A ADR facility, effective December 30, 2022.

The company also notified the FCA and the London Stock Exchange of its intent to cancel the listing and admission to trading of the ADRs and ordinary shares of Lukoil, effective June 6, 2022.

ADR holders may convert their ADRs into ordinary shares of Lukoil by December 30, 2022. Only persons who held ADRs as of April 27, 2022, are eligible for conversion of their ADRs into ordinary shares of Lukoil.

ADR were traded for 30.6% of Lukoil’s shares as of the end of May 2021, when data were last disclosed. The depositary receipts are listed on the LSE and trade on the Frankfurt, Munich and Stuttgart stock exchanges as well as the U.S. OTC market.

Source: Interfax

Since February Russian stocks trading on the London Stock Exchange and US markets have been halted due to Russia’s invasion of Ukraine. Now with trading on foreign markets banned by Russia, Lukoil is one of the first firms to terminate its depository programs. Other Russian companies will follow soon.

For American investors holding Lukoil, now is the time to make a decision on what to do with their ADRs.

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Disclosure: No positions

Even The Best Stocks Have Big Declines Over The Years

Posted by David Hunkar on 10 May 2022, 3:21 am

The S&P 500 is down about 17% year-to-date. Talks o a bear market and a looming recession are becoming increasingly prevalent in the media in recent weeks. With that said, it is important to remember that even the best performing stocks of all time can and will fall. Sometimes the declines will be dramatic with losses of 50% or even 70% or more.

Tech giant Apple(AAPL) created $1.50 Trillion of shareholder value from 2010 to 2019 according to one study:

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But that did not stop Apple from falling heavily a few times over the years. For instance, since its IPO in 1980 Apple stock has plunged by more than 70% three different times as shown in the chart below:

In 2012, Apple stock shed 40% in just 9 months.

But overall shareholders have earned a compounded annual average return of over 22% since IPO.

Another example of such stock is Amazon (AMZN). It crashed by over 91% during the dot com collapse.

Source: Drawdowns: Even ‘God’s portfolio’ can’t avoid them by Chris Demasi at at Montaka Global Investments

Disclosure: No positions

Canadian Bank Stocks’ Return Year-to-Date: Chart

Posted by David Hunkar on 9 May 2022, 5:21 am

Canadian banks stocks also have not escaped the carnage in the markets so far this year. The declines have not been severe. Most have fallen under 10% with the exception of Bank of Nova Scotia(BNS) which is off by over 11%. Unlike its peers, ScotiaBank has high exposure to emerging markets especially in Latin America. So investors are worried more about its future earnings as rising interest rates, geopolitical risks and other factors are worse for emerging markets than developed markets.

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Source: Yahoo Finance

Related Stocks:

Bank of Nova Scotia (BNS)
Bank of Montreal (BMO)
Canadian Imperial Bank of Commerce (CM)
Royal Bank of Canada (RY)
Toronto-Dominion Bank (TD)

Disclosure: Long all 5 stocks

Countries Supporting Ukraine With Weapons: Map

Posted by David Hunkar on 9 May 2022, 3:21 am

In the current Ukraine-Russia war, some 30 Western countries are sending weapons to Ukraine so that Ukraine can use those against Russia and defend itself. The lone Asian country that is also participating in this coalition is Japan. In addition, the global south is participating in this war by supporting Ukraine with arms as the map below shows. Major emerging countries such as China, India, Brazil and a host of others are not supporting either of the two parties to the war militarily.

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Source: The Western weapons fueling the Ukraine war, Asia Times

Though it is a proxy war for now, there is a huge risk should Russia ever decide to retaliate either directly or indirectly against any of the countries supporting Ukraine militarily.

Minerals and Metals in Your Smartphone: Infographic

Posted by David Hunkar on 8 May 2022, 3:21 am

More than 40 metals and rare earths are used in the manufacture of a smart phone. The following infographic shows some of those that are present in a smart phone:

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