Putin’s war: Why are financial markets taking the war so well? – Deal


The war is raging in the Ukraine and the stock markets are (almost) acting as if nothing is wrong. The German Dax stock index (40 companies) has caught up. It is still 13 percent below the January high. On the other hand, it has gained about 14 percent since the March low.

Why are financial markets taking Putin’s war so well?

It sounds cynical. But the first scare of the Russian invasion of Ukraine on February 24 has been digested. Many investors have gotten used to it. The US stock index S&P 500, much more important than our Dax, is only seven percent below the all-time high of early January.

Crucially, the United States is further from the front lines than we are, produces a lot of oil and gas, and has few economic ties to Russia. But other indices (Switzerland, Australia, India) have also risen significantly recently.

Many investors have found that stock market declines are good entry opportunities. This is what happened in the initial chaos of Corona. The Dax fell about 40 percent in a month and almost doubled in the next year and a half.

Even after Putin’s invasion, the stock market corrected higher.

Which sectors are booming, which are going bad?

Commodity stocks in particular rose. These include oil and gas companies such as Shell (Great Britain), Total (France), but also large agricultural traders such as BayWa (Munich).

In the case of pharmaceuticals, long-distance corridors to warehouses in both good times and bad, winners included Novo Nordisk (Denmark, world leader in the diabetes market) and Basel giant Roche (diagnostics , cancer).

In addition, prices in the consumer goods segment are increasing. Because despite the war and the current crisis, people have to eat, drink, shower and wash. Winners include Nestlé (Switzerland, Nespresso) and Beiersdorf (Nivea).

Everyone who is big in Russia (Henkel, Persil, 2,500 employees there) or has problems without Russian gas (chemical giant BASF) fared poorly.

Could the stock market crash or crash soon?

Yes. There are many major risks that can trigger an accident at any time, from minute to minute.

1. Russian oil and gas could suddenly disappear completely.

2. China, the world’s second largest economy, continues to pursue a twisted “zero covid” policy. The economic metropolis of Shanghai has been sealed off indefinitely. This has massive effects on world trade, which is already chaotic due to Corona. The lockdown is causing production problems and bottlenecks in components (including computer chips) for dozens of companies around the world.

3. Despite the economic meltdown, the US Federal Reserve or the European Central Bank (ECB) could raise interest rates sharply without warning to curb inflation.

So should investors stay away from the markets? no If you stick to an ETF savings plan, the ups and downs will eventually even out, or you’ll be positive in the long run. Just don’t take too much risk, don’t bet everything on a single stock or industry.

Putin's war: Why are financial markets taking the war so well?Foto: BILD

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Photo: BILD

Why is the ruble suddenly so strong again?

After the attack on Ukraine on February 24, Russia’s national currency, the ruble, collapsed in a matter of days. At its height, the exchange rate fell by around 70 percent against the euro and even more against the US dollar.

Currently, however, the ruble exchange rate has practically returned to its pre-war level.

For one thing, dictator Vladimir Putin has imposed strict capital controls. On the other hand, he forces buyers of raw materials to pay in rubles.

You have to take them to the financial market, change them. This increases the demand for Russian money and increases the rate of the ruble.


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