June 24 (Reuters) – Mutinous Russian mercenary fighters
barrelled towards Moscow on Saturday after seizing a southern
city overnight, with Russia’s military firing on them from the
air but seemingly incapable of slowing their lightning advance.
Here are reactions from investors and analysts to the news:
STEVE SOSNICK, CHIEF STRATEGIST AT INTERACTIVE BROKERS:
“This is a truly exogenous event that leads to initial shock and
a flight to safety. It should awaken VIX from its stupor. First
move is likely to be a bump in government bond prices (lower
yields) and USD. Riskier assets tend to decline. The question is
how much and how lasting the reaction will be, much of which
depends upon unknowable developments.”
“Even with Russian embargoes, they still sell plenty of raw
materials to sympathetic nations like China and matter to the
global supply. It is reasonable to expect oil and other key
commodity prices to rise. If oil prices rise sharply, that will
indeed weigh upon equities and reignite stagflation fears. Gold
is tough to read. In theory it should benefit from a flight to
safety, but in practice a strong dollar can impede it.”
“U.S. treasuries should rise on the safety trade.”
“With Russia largely disconnected from the global economy, few
U.S. or European companies will have direct impacts from
instability in a country that’s already a pariah. So the broader
markets will take their cues from bonds and commodities.
Defense-related stocks should catch a bid – the world is not a
safer place today – and commodity-linked stocks should also be
outperformers for the reasons stated above.”
MICHAEL PURVES, CEO AT TALLBACKEN CAPITAL ADVISORS:
“Certain parts of the stock market have been flying really high,
we do know that’s largely been driven by P/E expansion rather
than earnings and this might give people an excuse to sell.”
“These types of geopolitical shocks are often short lived and
usually don’t have much impact on the U.S. stock market but this
time it may because stocks have run up so high.”
“Any time you have these kinds of political disturbances in a
commodity nation you at least expect a short term shock to the
prices of the commodities produced there.”
“We should start seeing classic risk off dynamics on Sunday
night such as global equity futures lower, crude oil higher,
treasury prices higher.”
DAVID KOTOK, CHIEF INVESTMENT OFFICER AT CUMBERLAND ADVISORS IN
SARASOTA, FLORIDA:
“This is a potential civil war in Russia. Important implications
as Putin is already weakened by events and now faces existential
threat as does his antagonist.”
“Turmoil effects include the price and availability of Russian
energy. Geopolitical impact on Russian alliances like Belarus
and nearby countries in Soviet sphere. In EU what does Hungary
(Orban) or NATO ally Turkey do.
“Regardless of the outcome, this is already a very big deal.
“Initial market reaction will be driven by news reports and by
any concrete events. That is usually true of most rapidly
changing event sequences. The strategic damage is already done.
Every capital in the Russian alliance of countries and in the
adversaries’ alliance and in the neutral alliance is rethinking
the relationship with Putin.”
GEORGE BOUBOURAS, HEAD OF RESEARCH AT K2 ASSET MANAGEMENT IN
MELBOURNE:
“Current reported Russian events are not helpful. It’s very
concerning for the complex geopolitical global landscape and any
uncertainty will obviously impact markets.”
“Higher vol lies ahead. However fundamentals will eventually
resurface. That is, economies in developed markets remain
resilient & central banks concerns’ with stubborn inflation
creates many challenges as rates need to go higher & remain
higher for longer.”
JAMIE HALSE, WHO MANAGES AN A$500 BILLION JAPAN-FOCUSED FUND AT
PLATINUM ASSET MANAGEMENT IN SYDNEY:
“If Putin removed, pure speculation and a hypothetical on my
part, troops withdrawn from Ukraine and peace deal agreed, then
that would be bullish for Russian-exposed businesses, Eastern
Europe stocks, probably Chinese stocks by implication. Bearish
energy, resources and defense stocks.
“Probably bearish Indian stocks too as the dividend they’ve
received from cheap Russian oil likely disappears.
“On the other hand, civil war, especially if prolonged, in a
major nuclear armed nation should make anyone
uncomfortable…(though) we don’t really know what’s going on at
this point. Civil war may be too long a bow to draw.”
(Reporting by Tom Westbrook in Singapore, Megan Davies,
Carolina Mandl and Ira Iosebashvili in New York; Writing by
Lananh Nguyen; Editing by Daniel Wallis)
