History shows markets rebound after a crisis

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Russia’s threat to invade the Ukraine has sparked volatility across sharemarkets but it may not be as bad as investors fear.

is a reminder to investors of how markets behave in a crisis – and what to expect if Russia does follow through.

The rebound from the fall is even faster: 23 out of the 29 events, or 86 per cent of the time, the benchmark was, on average, 7.6 per cent higher a month later. A year later, the market bounces back by an average of 24.7 per cent. Oliver notes that a prudent strategy for long-term investors is to hold their nerve and look for buying opportunities, but adds that volatility is likely to persist in the short term.While markets have been largely spared geopolitical turbulence over the past two years as the pandemic took centre stage, Europe’s largest asset manager Amundi Asset Management says the Russia-Ukraine crisis is a reality check.

Russia produces 17 per cent of global gas and 13 per cent of global oil, according to ANZ, while also supplying 15 per cent of traded thermal coal and 14 per cent of traded coking coal. The country’s balance sheet is robust with very low debt, large current account surpluses and high external liquidity. Additionally, higher energy prices have benefited exports and fiscal revenues.Earlier this week, Morgan Stanley expressed a particularly bearish view of how a Russian invasion of Ukraine would affect global equities and economies.

 

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Jinghe17215567 It’s Ukraine. Pronounced YouCrane. Not the Ukraine.

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