Ukraine-Russia: How to position yourself one year on

[MongiIG]

IGTV’s Angeline Ong takes a look back at the immediate impact of the Ukraine crisis on everything from commodities to stocks for clues as to how it will play out in 2023.

 

 Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Friday 24 February 2023 

One year on

It has been a year after Russia invaded Ukraine or Moscow's 'military operation' and we are still not seeing any end in sight to this conflict. Ukraine remains unbeaten. Putin is still upping the stakes. Let's take a look at the charts from where we have come from. I have a picture of the SPDR S&P Oil & Gas Exploration and Production chart, which is a really interesting one to watch. I've squared off the area from when the crisis started to where we are right now. Now, the immediate impact was it jumped some 30 percent. This is the index. It has rise around 14% one year on.

Metals

Russia also has a large role in metals and that's driven an even bigger initial jump in commodities. Let's have a look at our next chart. Nickel initially jumped ten percent. This is global nickel. At one point, it prompted the London Metal Exchange to halt trading, in March last year. Let's check in one year on. So, nickel has really come off those heady heights. So if you held onto that, it would not have been a good picture, but if you went short after that initial reaction, then you're in the money and moving forward.

Wheat

Take a look at Chicago Wheat futures because Ukraine and Russia account for around a third of global wheat exports. Wheat futures initially jumped when the crisis started. Let's have a look at wheat here for you. As you can see, here is where we saw quite a big jump, but we have come off quite a bit now by around 45 percent.

Defense

Now, what is very, very interesting too, is the defense sector. Let us take a look at Hensoldt's chart. Now. Hensoldt AG has seen its shares sharply rise right after the conflict started. And we're still higher. Another one to check in on is Rheinmetall AG. It makes the armored vehicles that are being used in the conflict. Here's a chart, as you can see that if you bet on this stock, you are also in the money if you went long on this. And finally, let's not forget Raytheon Technologies Corp (All Sessions), which makes the Stinger. And there you have it. Raytheon is still up as well, from when we started, a year ago, when this crisis began. Now, where is the salad dressing? Where do we go from here? Now it depends on what your outlook is. If this conflict continues, then we can see further upside for the defense and especially the energy industries and commodities as well. If you think there's going to be a stalemate or de-escalation? We might see some profit taking and some of that momentum come off. However, the era which every investor is unsure of trading at the moment is if Russia becomes destabilized and a state that is increasingly blocked out from the international community. For the moment, this crisis continues to have absolutely no resolution.

source: Bloomberg