What does the Ukraine Crisis Mean for Markets?
Brock Melnyk – March 1st, 2022
As I believe most of you know, I am of Ukrainian decent. My paternal grandfather emigrated from Ukraine in the late 1930s prior to WWII. The tragedy and and loss of life from war is beyond description. It is difficult to comprehend the effect this will have on the citizens of Ukraine and their families around the world. The humanitarian impact cannot be understated and my heart goes out to everyone affected.
History shows us that while concerns about financial markets and the global economy are appropriate, the reality is that geopolitical crisis such as Russia invading Ukraine do not typically have long-term consequences for investors. Russia’s economy is the 11th largest in the world according to the International Monetary Fund, and is only 1/20th the size of the US and 1/15th the size of China, so in itself is not large enough to affect global economic growth, even if significant sanctions are levied against it by the US and other Western Nations.
In their most recent Viewpoint Fidelity Investments (the worlds fourth largest asset manager with assets under administration of $11.1 Trillion) summarized some key takeaways including:
- The conflict between Russia and Ukraine may contribute to increased short-term market volatility
- Disruption of Russian energy exports as result of the conflict could temporarily contribute to rises in global energy prices
From an investment standpoint, the biggest impact will be negative market sentiment on Russian stocks, bonds and currency. Higher oil and gas prices could further benefit North American Energy Companies, whose stocks have been among the best performers over the past year.
This is where the guidance of a financial advisor is important so short term risks are managed with the pursuit of long term goals in mind. History suggests that patient investors are likely to be rewarded with the lift from current extreme levels of negative market sentiment.
The chart below from Ryan Detrick, Chief Market Strategist at LPL Financial, highlights that unless there is a global recession, stock markets tend to recover and have positive performance for the 12 months after the event:
For the remainder of 2022 it is important to remember the two main drivers of market performance will be:
- US Federal Reserve Monetary Policy (how fast will they raise rates)
- Company Earnings and Revenue Growth as we exit the Covid-19 Pandemic
There will be numerous other events that will be center focus in the media for periods of time. As we have been suggesting for some time, 2022 is looking to be a volatile year, one which prudent investment strategies will be important..
If you want to read more about the Russian Invasion I recommend this article from Ian Bremmer, President of the Eurasia Group; or this Complete Visual Guide to the Ukraine-Russia Crisis in The Guardian. If you are feeling sympathetic to the Ukrainian cause, or just want to learn more about the history between Russia and Ukraine, I recommend you watch Winter on Fire: Ukraine’s Fight for Freedom on Netflix.
Sources: Ian Bremmer, What Actually Mattered This Week, February 25th, 2022; Fidelity investments, What the does the Ukraine Crisis Mean for Markets?, February 22, 2022; ADV Ratings, Fidelity Investments; September 20th, 2021; The Guardian; Russia’s War in Ukraine, February 28th, 2022
The information contained herein has been provided for information purposes only. The information has been drawn from sources believed to be reliable. Graphs, charts and other numbers are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document. Wellington-Altus Private Wealth Inc. (WAPW) does not guarantee the accuracy or completeness of the information contained herein, nor does WAPW assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Before acting on any of the above, please contact your financial advisor. WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
© 2022, Wellington-Altus Private Wealth Inc. ALL RIGHTS RESERVED. NO USE OR REPRODUCTION WITHOUT PERMISSION.www.wellington-altus.ca
Newswire
What does the Ukraine Crisis Mean for Markets?
What does the Ukraine Crisis Mean for Markets?
Brock Melnyk – March 1st, 2022
As I believe most of you know, I am of Ukrainian decent. My paternal grandfather emigrated from Ukraine in the late 1930s prior to WWII. The tragedy and and loss of life from war is beyond description. It is difficult to comprehend the effect this will have on the citizens of Ukraine and their families around the world. The humanitarian impact cannot be understated and my heart goes out to everyone affected.
History shows us that while concerns about financial markets and the global economy are appropriate, the reality is that geopolitical crisis such as Russia invading Ukraine do not typically have long-term consequences for investors. Russia’s economy is the 11th largest in the world according to the International Monetary Fund, and is only 1/20th the size of the US and 1/15th the size of China, so in itself is not large enough to affect global economic growth, even if significant sanctions are levied against it by the US and other Western Nations.
In their most recent Viewpoint Fidelity Investments (the worlds fourth largest asset manager with assets under administration of $11.1 Trillion) summarized some key takeaways including:
From an investment standpoint, the biggest impact will be negative market sentiment on Russian stocks, bonds and currency. Higher oil and gas prices could further benefit North American Energy Companies, whose stocks have been among the best performers over the past year.
This is where the guidance of a financial advisor is important so short term risks are managed with the pursuit of long term goals in mind. History suggests that patient investors are likely to be rewarded with the lift from current extreme levels of negative market sentiment.
The chart below from Ryan Detrick, Chief Market Strategist at LPL Financial, highlights that unless there is a global recession, stock markets tend to recover and have positive performance for the 12 months after the event:
For the remainder of 2022 it is important to remember the two main drivers of market performance will be:
There will be numerous other events that will be center focus in the media for periods of time. As we have been suggesting for some time, 2022 is looking to be a volatile year, one which prudent investment strategies will be important..
If you want to read more about the Russian Invasion I recommend this article from Ian Bremmer, President of the Eurasia Group; or this Complete Visual Guide to the Ukraine-Russia Crisis in The Guardian. If you are feeling sympathetic to the Ukrainian cause, or just want to learn more about the history between Russia and Ukraine, I recommend you watch Winter on Fire: Ukraine’s Fight for Freedom on Netflix.
Sources: Ian Bremmer, What Actually Mattered This Week, February 25th, 2022; Fidelity investments, What the does the Ukraine Crisis Mean for Markets?, February 22, 2022; ADV Ratings, Fidelity Investments; September 20th, 2021; The Guardian; Russia’s War in Ukraine, February 28th, 2022
The information contained herein has been provided for information purposes only. The information has been drawn from sources believed to be reliable. Graphs, charts and other numbers are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document. Wellington-Altus Private Wealth Inc. (WAPW) does not guarantee the accuracy or completeness of the information contained herein, nor does WAPW assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Before acting on any of the above, please contact your financial advisor. WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
© 2022, Wellington-Altus Private Wealth Inc. ALL RIGHTS RESERVED. NO USE OR REPRODUCTION WITHOUT PERMISSION.www.wellington-altus.ca
Recent Posts
October Market Insights: The Great Delusion
Are We Trapped in a Cycle of Change That Never Changes? A Forecast for 2025 and Beyond
Quarterly Investment Insight – Fall
How do you view the glass — half full or half empty? This question aptly captures the dual nature of sentiment today. On one hand, our standard of living is among the highest in history, fuelled by technological advances, improved quality of life, substantial and growing wealth and increased life expectancy. On the other hand, this progress is overshadowed by rising costs of living, heavy debt burdens, declining productivity and ongoing geopolitical tensions.
September Market Insights: Trump’s Trade War
Tales of empires are as old as civilization itself. From ancient Mesopotamia to Rome, from the Mongols to the British, history is replete with stories of great powers that rose to dominate vast swaths of territory, only to eventually crumble under the weight of their ambitions. The United States of America, as the preeminent global superpower of the modern era, finds itself at a critical juncture in this age-old narrative.
August Market Insights: Trump’s Fiscal Frenzy
Godfather of Modern Monetary Theory Warns of “Drunken Sailor” Spending “Neither a borrower nor a
July Market Insights: Navigating The Dual Revolutions
Mark Twain once delivered a sobering reminder of humanity’s tendency to disregard transformative ideas while allowing misconceptions to persist. As we stand on the precipice of two seismic shifts—the AI revolution and an impending fiscal storm—his words resonate profoundly.
The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus.