How the Russian/Ukraine Conflict Might Affect Your Finances

 

Advice

How the Russian/Ukraine Conflict Might Affect Your Finances

The economic impact of the Russian/Ukraine conflict is being felt around the world – so, what is the current situation of the financial market, and what steps can you take to protect your finances?

As I sit down to write this article, I have just heard on the news that today is now one month from the start of the Ukraine/Russia conflict.  Although the time seems to have passed extremely quickly for those of us looking on, I am sure it has been the longest month of the Ukrainian people’s lives.

We have seen the global community coming together to impose sanctions on Russia and Putin, in an effort to curb his ability to continue funding this conflict and major organisations and companies around the world pulling out of Russia wherever possible.

What is the current situation in the global financial market?

The current situation remains fluid and ever changing with Global stock markets extremely volatile at the moment. It is impossible to hedge against this; any new attack or response can lead to huge market swings either way, impacting all asset classes, be it stocks and shares, cash, gold, etc.

The escalation of war has added to concerns about slowing growth and inflation leading to record outflows from European stocks. Outflows were at $6.7 billion in the week to 2nd March according to EPFR Global Data, with the Stoxx Europe 600 falling about 13% from its January record, higher than the S&P 500’s 9% drop from its closing peak. However, many of the major indices have now recovered to pre-war lows.

Oil is still at a high, with Brent Crude almost hitting $120 Dollars a barrel on Thursday on signs that an Iranian nuclear deal may be near. JP Morgan Chase & Co. said that global benchmark Crude could end the year at $185 if Russian supply continues to be disrupted.

How can you plan for the future in uncertain times?

Everyone is now trying to second guess what will happen next. On the spill-over risk most commentators agree that the harshness of Western sanctions and the bravery of the Ukrainian resistance, will limit the conflict to Ukraine and NATO won’t escalate the situation by imposing a no-fly zone, for example. On what Putin wants, Churchill gave us the answer in 1939: “I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma; but perhaps there is a key. That key is Russian national interest.” That means Ukraine neutrality at a minimum, with some territorial gains possible.

So how will it all end up? After dusting off the history books the Russian Finnish war of 1939-40 could be a template. It was a short but intense war, which ended in a stalemate. The parallel would mean that Ukraine, at the end, free but neutral and probably not a member of NATO or the EU.

In these times if Investors panic and sell they are just crystallising a loss, which no one wants, we are hoping for a peaceful resolution as swiftly as possible and history has shown us that market reactions to war and its impact are usually short lived and that markets will bounce back over time.

So, as with the COVID nightmare, if you have a good portfolio in place, to sit tight and ride it out is historically a proven approach.

If you have any concerns about your current investments and pensions and would like us to review, contact us today by email [email protected] or call me on 06 38 86 99 70. Website: www. blacktowerfm.com

This communication is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity.

Blacktower Insurance Agents & Advisors Ltd is regulated in Cyprus by the Insurance Companies Control Service and registered with ORIAS in France. Blacktower Financial Management (Cyprus) Ltd is regulated in Cyprus by the Cyprus Securities & Exchange Commission and is registered with the AMF in France.

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