SEB provides investor advice after increased tension
The situation between Russia and Ukraine has made many investors nervous, and the analysts at SEB come up with a stable tip on how the unrest should be handled.
The situation between Russia and Ukraine is tense, and on Friday night Bloomberg News reported that US President Joe Biden during a press conference in the White House said he was sure that a Russian invasion was imminent .
According to Reuters, Russia and Belarus have chosen to extend military exercises that should be over by Sunday, which intensifies the pressure on Ukraine.
Opportunity to buy
Chief strategist Johan Javeus in SEB thinks it may be wise to be ready for the buy button if the market falls in the wake of the conflict between the countries.
“The undersigned are of those who almost reflexively believe that a fall in the stock market due to geopolitical unrest is a buying opportunity,” he writes in a market commentary.
He believes history has shown that wars, terrorist attacks and natural disasters have rarely had a lasting impact on the financial market.
“For something to have a genuine lasting effect on the markets, what happens must significantly change the circumstances for companies and households, and thus also the economy as a whole,” he writes.
As Russia is one of the world’s largest exporters of energy, Javeus believes that an invasion of Ukraine on paper could have a major impact on the market. With Russia on one side of the table, and the United States and the European Union on the other, there are great powers that could potentially be drawn into the conflict. Among other things, Germany and the Netherlands are dependent on Russian gas.
According to Javeus, the United States and the European Union have ruled out direct military involvement. Thus, the movements in the market do not have to be dramatic, even if the situation worsens to the point that Russia attacks parts of Ukraine.
Javeus believes that it is difficult to distinguish what is happening in Ukraine from other economic factors, when looking at how much of the fall in the stock market is due to the conflict. He points to higher interest rates and tighter monetary policy in light of rising inflation.
“My simple advice to all investors is to base investment decisions on their own views on the overall economic outlook. Predicting what will happen to growth and inflation is difficult, but still much easier than predicting geopolitical events “, he writes.