Ukraine conflict: sanctions against Russia

Ukraine conflict: sanctions against Russia
Ukraine conflict: sanctions against Russia
Moskau (c) michael-parulava-unsplash
Share post:

The invasion of Ukraine by Russian forces continues to progress. According to the Financial Times, troops are attacking Belarus from the northern border, the eastern border with Russia, and Crimea in the south.

The Bloomberg news portal reports that the Russian military has captured the Chernobyl nuclear power plant, located about 130 kilometers north of Kiev. Moscow is preparing further waves of attacks to advance inland.

First reaction of the West to the invasion

Yesterday also saw the West’s first reaction to the invasion. Both the US, the EU and the UK announced sanctions against Russia. These mainly target Russia’s largest banks, oligarchs and the export of technology goods to Russia.

For now, however, the sanctions do not target Russia’s oil and gas sales, which accounted for about half of the country’s export revenue last year. Concerns that this could happen have caused oil prices to rise noticeably in recent weeks.

The markets reacted yesterday with relief to the announcement of the sanctions, apparently a stricter approach was priced in here. After a weak opening, the U.S. leading index S&P 500 turned into the profit zone and ended the day with a plus of 1.5%. The price of North Sea Brent crude oil, which had risen to over USD 105 in the meantime, fell back below the important USD 100 mark.

Although the safe havens, such as gold or credit-safe government bonds, were up yesterday, they also had to give up parts of the gains in late American trading. Today’s trading session in Asia followed the lead from America. The Japanese benchmark index Nikkei rose by 1.95%. Futures contracts on European stock markets today also point to significant gains.

What will we observe the next few days?

Despite the markets breathing a sigh of relief, we expect volatility to remain high as it has been in recent weeks. This is also indicated by the VIX index, which is trading at an elevated level of around 30, reflecting the expected short-term volatility of the S&P 500.

From our point of view, the following factors will be most important in the coming days:

the further course of the military action in Ukraine and whether it will be confined to Ukraine
after its end the further political events in Ukraine
the sanction mechanisms by the West but also any counter-sanctions by Russia, which could affect oil and gas supplies.

The last point in particular is crucial for the impact on further global growth and inflation.

Legal note:

Prognoses are no reliable indicator for future performance.

DOSSIER

RESPOND TO THE ARTICLE

Leave a comment Required fields are marked with *

Your email address will not be published.

Legal disclaimer

This document is an advertisement. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH, pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the key investor document/KID can be viewed in their latest versions at the web site www.erste-am.com within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund. Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your shares. Persons who are interested in purchasing shares in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of fund shares to American citizens. Misprints and errors excepted.