The recent headlines being made in the Ukraine are clearly of interest to those who wish to invest in Eastern Europe. It should be noted that this blog is certainly not the place for a discussion on the political merits of decisions that are being taken in that part of the world.
However, the financial ramifications are certainly of importance and it’s right that they should be given due consideration. After all, an understanding of what’s going on could lead to a greater insight on the investment opportunities that may be available.
As has been written elsewhere, one of the knock-on effects of the crisis has been the falling value of many shares on the Moscow stock exchange. Some analysts have attributed such falls to the sanctions that have been announced by a number of Western governments. Again, without looking too closely at the nature of such sanctions, it does seem reasonable to ask whether there is a need to consider the impact here on investors.
The future of the Ukraine
For those who are looking to invest directly in Ukrainian companies, there’s a high degree of uncertainty right now. Few people could claim to have an understanding of how the situation will resolve and what it will mean for businesses that are local to that area. What we do know, however, is that markets and investors rarely like a high degree of uncertainty.
Until the crisis reaches a point of resolution, it seems reasonable to expect that share prices will continue to fluctuate.
The impact on Russia
Much of the focus of the news headlines has understandable been on the people of the region and how their lives might be expected to change. Much analysis has been carried out on the Crimean region, in particular.
But what about the impact on Russia? Tumbling stock markets rarely lead to positive headlines and it might be expected that investors will flee, looking for alternative safe havens.
This undoubtedly provides an interesting situation for fund managers and others with expertise that is region-specific. For the most part, their expertise will mean that they will have been aware of what was brewing, well in advance of this coming to the attention of the wider public here in the UK. What that should mean is that they were already making investment decisions that took into account the amount of risk that was involved.
The biggest losers here, in purely financial terms, are likely to be amateur investors. While professionals may have had advance warning of the looming crisis, it’s to be expected that many amateur investors will have witnessed these events from afar, with a combination of surprise, outright shock and obvious concerns.
This is very much a live situation too. Until events settle down, it’s very difficult to know whether there will be a real long-term impact. For those who are reliant on professional Fund Managers, the hope is that those experts have done their research.
For those who are investing directly in the region, it’s time to look more closely at what’s going on, in order to allow the correct actions to be taken.