The war has significantly increased the degree of uncertainty for investors. Who would want to invest in such conditions? We cannot know what the consequences will be in the short or medium term on the economy, on oil prices, on inflation and on interest rates.
However, I believe that any crisis sows the seeds of eventual improvement in economic and geopolitical conditions. It is when everything seems to be going wrong that the investor must focus even more on the long-term horizon.
So, even if they seem rather illusory in the current conditions, I see some potentially positive elements emerging from the current conflict.
First of all, it seems to me that the Russian-Ukrainian war has confirmed the extraordinary strength of economic and financial weapons that the United States and Western countries have at their disposal. The full consequences of the numerous economic sanctions imposed on Russia are not yet known, but they will cause it considerable damage. Between February 24, the day Russia invaded Ukraine, and March 17, the ruble lost more than 22% of its value against the US dollar; a few days ago, it had lost more than a third of its value. Interest rates there have doubled in recent weeks and the government is in a potential position of default on its debt. The economic pressure on Russia is such that it could undermine the Russian political regime. In my opinion, it is likely that these economic “weapons” will become the default option that countries will choose to resolve their conflicts in the future rather than resorting to arms.
Second, the probable success of the sanctions against Russia is, in my opinion, almost irrefutable proof of the appeal of the market globalization and the economic integration of all countries into the world economy. In recent years, we have seen political pressure in the United States favouring protectionist measures, in particular vis-à-vis China. It seems to me that the devastation that sanctions could wreak on Russia is the best case for opening global markets in years to come.
Another interesting point in my opinion is that the war in Ukraine could accelerate the movement towards green energy. The conflict caused the price of a barrel of oil and of gas to explode. It also became clear that every country should seek to reduce its energy dependence on authoritarian regimes and fossil fuels. The movement towards green energy, which is already well underway, could accelerate over the next few years.
Finally, I find it reassuring to see how quickly the vast majority of countries on the planet have come to a consensus over the past few weeks and have united to punish Russia. In fact, there was a similar reaction in the aftermath of the COVID-19 pandemic, with the majority of countries agreeing to put in place health measures to counter the virus. The ultra-rapid development of vaccines against COVID-19 is a great example of the ability of countries and companies to work together to counter a global challenge. This is encouraging for the challenge posed by global warming.
I sincerely hope that a quick and peaceful resolution of the conflict between Russia and Ukraine will be achieved.
For the investor in me, I can only hope that this inhuman war could ultimately produce positive long-term effects.
