Tiger comments: An act of war roiled financial markets
Build-up of geopolitical tensions between Russia and Ukraine which many worry could spark a military conflict has come to fruition. In the prevailing macroenvironment, we believe that the unexpected event has brought about some questions from our investors and hence in this write up, we will be providing our reader with a better understanding to the situation.
What has happened?
- The North Atlantic Treaty Alliance (NATO) has been expanding east after the Cold War ended – NATO took in countries that was once part of the Soviet Union.
- The move was viewed as a threatening encroachment towards Russia’s border that could place the nation at risk of attacks。
- Russia has also claimed that the inclusion of past soviet nations was a betrayal of western promises in the 1990s.
That said, what really sparked tensions between Russia and Ukraine was the Ukrainian governments’ ambition to align itself more with western countries – Ukraine has publicly stated interest in joining NATO. Since then, Russia has expressed strong disapproval and demanded legal assurances that Ukraine would never be admitted to NATO but those demands were refused which led to Russia’s latest actions.
What are the implications for the market?
Markets have already been roiled this year by hawkish signals from the Feds and the European Central Bank (ECB). With the escalation initiated by Russia, we saw prices of energy and other commodities soar (Russia is a prominent exporter) which brings about more concern amongst market participants as uncertainties looms.
On a macro level, we believe that world economies may take a hit if prices remains elevated for a prolonged period as companies and consumer find their bills rising and spending power squeeze. Combine this with the fact that growth in most economies are moderating, a stagflation outcomes appears imminent – rising prices and slower economic growth. That said, we believe that the rally in commodity, more specifically energy, will cool as US and its allies would not impose sanctions on Russia that would result in a price shock.
Delving deeper, the outlook for financial markets remains precarious and we believe that many will look to the central bank’s policy for direction – with interest rates at rock bottom and asset purchases maxed out, central banks have little room for manoeuvre which leads to the question of will there be a change in policy.
Overall, we expect sentiments to be skittish and volatility will continue to be the hallmark of global markets this year as market participants come to grips with a barrage of developments. Regardless, we believe that the long term case for investing remains intact and having additional liquidity will come in handy.
After all, time in the market is better than timing the market.
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
- BalancingAct·2022-02-28As long as the West n Russia don't egg each other into physical war....NATO is hell bent on expansion n Russia is stubbornly drawing that red line. Who will wink first?4Report
- Madiq Izichi·2022-02-27not the first war to mess with the market and won't be the last war either4Report
- SilverAmour·2022-02-28US is the wolf in sheep's clothing that forced this unfortunate event to happen...civilians are the innocent ones2Report
- jyan·2022-02-28format quite messy, recommend to scale down on font size2Report
- JonL·2022-02-28Just hope for peace and less violence, less red everywhere!1Report
- Gackky·2022-02-28hope the format will avoid cutting of words🤣2Report
- Tanken·2022-03-14prayers to them1Report
- sunflower19·2022-02-28Thank you [Strong]1Report
- ming22·2022-02-28Agreed, time in the market....1Report
- SilentInvst1·2022-02-28Good analysis. 🤓1Report
- Joel Santos·2022-03-17[Like]1Report
- SJY93·2022-03-09ok1Report
- katgoh·2022-03-09yy2Report
- Ah Wang·2022-03-09👍1Report
- Han Tee·2022-03-09Ok2Report
- Prost·2022-03-09👍💪2Report
- efd25ea·2022-03-08gcx1Report
- Juliantotans·2022-03-02ok1Report
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