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Other top 100 companies
Notably, companies in the food industry that have
remained in Russia such as Mondelez and PepsiCo stand out in the top 15
with a threefold increase in profits.
Mondelez cited humanitarian reasons for its decision to stay and maintain its
brands, while PepsiCo, which has been in Russia since Soviet times, ceased
production of international brands like Pepsi and 7UP and switched to local
brands like Dobry, Rich, and My Family. Part of the increase in net profit is
attributed to the reduction of advertising expenses.
2.6 Gold back in fashion
In the third quarter of 2022, global central banks added $20bn of gold to their international reserve portfolios. This marked the largest quarterly increase in official gold demand in 55 years, according to the World Gold Council. While this surge in gold demand may appear unprecedented, but gold as a share of official foreign reserves had already reversed its decline more than a decade ago, around the time of the 2008-9 Global Financial Crisis, the International Monetary Fund (IMF) said in a note.
There are two possible explanations for this change, the IMF argued. Firstly, gold is seen as a safe haven and desirable reserve asset during periods of economic, financial, and geopolitical uncertainty, as well as when returns on reserve currencies are low. These conditions have been prevalent in recent years, and gold is commonly viewed as an inflation hedge and portfolio diversifier. Additionally, gold holds cultural and traditional significance, as central banks and governments have long held gold reserves.
Secondly, gold is perceived as a secure and desirable reserve asset when countries face financial sanctions, asset freezes, and seizures. The freezing of the Bank of Russia's foreign-exchange reserves by G7 countries drew attention to the need for alternative forms of reserves insulated from sanctions.
Russia accelerated its gold purchases following the annexation of Crimea in 2014 and confirmed that its gold is now fully vaulted at home. Earlier sanctions had also disrupted access to reserves for other central banks and governments. Unsurprisingly, the IMF paper found a positive correlation between sanctions and the tendency to increase gold holdings. The two biggest buyers of gold in recent years have been Russia and China, which between them account for two thirds of all gold purchases in recent years.
Despite the secular decline in the share of global reserves held in gold over the past four decades, gold still accounts for approximately 10% of total international reserves worldwide and has shown a slow rising trend in recent years.
International organisations, primarily the IMF and Bank for International Settlements, hold around 10% of official gold holdings. Among the remaining reserves, advanced economies hold two-thirds, while emerging markets and developing economies hold one-third. The United States and members of the
18 RUSSIA Country Report July 2023 www.intellinews.com