Russian Madness

Words fail all of us over the Ukraine situation – very sad and no-one really knows or understands what Mr Putin is trying to prove or achieve.

The financial consequences are severe for the Russians, most of whom did not want aggression and yet they will suffer the same as a punishment for Mr Putin and his cronies.

‘Afterwards’ perhaps there will at last be a more rigid global review on money corruption across the Globe generally, to stop the creation of beasts which can then ruin us all with their corrupt and illegal practices in other quarters, like this, if we are not careful.

The Russian stock market has plummeted and the Rouble alongside it. Of course, gas and oil prices jumped, so Russia will now receive even more for its exports, which too many countries still must buy, though Russia has been storing-up great reserves already.

How will investors be affected? Generally, ‘uncertainty’ creates any excuse for the market to reduce prices on certain stocks and sectors. Some drift is inevitable and all investors will have suffered in some way or another but the ‘damage’ so far is very limited. However, if you have direct Russian exposure (not so unusual these days), that will have been hit hard – stocks like Petropavlovsk, JP Morgan Russian Investment Trust, Raven Property or Evraz and yes, we have some, though as usual, our vast diversity offers protection.

Really it has to be a time simply to sit still and await ‘developments’ – which could come much sooner than anyone could possibly envisage. However, some consequences favour other assets – we hold silver, wheat and ‘agricultural products’ which have all bounced.

What else do we have that is perky? Energy, gold and general miners (unless Russian-centric) and the defence sector of which we have a couple – BAE Systems has bounced 88% since its October 2020 low for example. Even ‘ESG’ investors are beginning to realise that ‘defence’ is not ‘attack’ in the context of the Ukraine incursion and it needs supporting.

So what am I saying? Don’t panic; don’t go overboard but there are likely to be a few distressed sales going-on out there and a few popular stocks, etc which could suffer worse as investors choose to bank some profits in them.

‘Value’ stocks should again ride the storm better than tech and growth stocks of the last few years, though if things unravel too much, remember that liquidity can drive investors to sell what they know they can sell and then at any price; illiquid smaller stocks can remain unaffected in price as you can’t sell them…. It’s a funny ol’ world sometimes.