360° Coverage : Ukraine Crisis Has Spill Over Effects Beyond Russia, Deutsche...

2 Updates

Ukraine Crisis Has Spill Over Effects Beyond Russia, Deutsche Bank Says

Mar 3 2014, 5:11pm CST | by

Ongoing tensions between Ukraine and Russia have serious implications for investors, particularly Russian equities. But Russian investors won’t be the only ones to take a hit. Deutsche Bank said on...

Filed under: news

 
 
 

29 weeks ago

Ukraine Crisis Has Spill Over Effects Beyond Russia, Deutsche Bank Says

Mar 3 2014, 5:11pm CST | by

Ongoing tensions between Ukraine and Russia have serious implications for investors, particularly Russian equities. But Russian investors won’t be the only ones to take a hit.

Deutsche Bank said on Monday that the entire situation “bodes bad for all Russian assets, but also for the entire region of Eastern Europe, including Turkey.” As it is, Ukraine political woes have pushed oil futures higher today. Brent crude closed at its highest levels all year to $111.20, with West Texas Intermediate oil rising 2.3% to $104.92 for the April futures contract.

In equity markets, the Market Vectors Russia (RSX) exchange traded fund settled 6.8% lower, while the ruble returned some of its losses against the dollar today after a rough opening session.

The iShares MSCI Turkey (TUR) ETF underperformed the benchmark MSCI Emerging Markets Index by nearly 100 basis points to settle 2.8% lower.

Ukraine and Russia have been at loggerheads for weeks. It all started late last year when Ukraine’s president Viktor Yanukovych rejected a trade deal with the European Union in favor of closer ties with Russia. Many pro-European Ukrainians took to the streets in Kiev to protest Yanukovych, calling for his ouster and arguing that the president was not acting out of the national interest but taking orders from Vladimir Putin in Moscow instead.

Russia later gave Ukraine a nearly 50% price cut on natural gas, and offered the economically weak country a $15 billion aid package. But with Yanukuovych gone from Kiev and pro-Western technocrat Arseniy Yatsenyuk in his place, tensions have heated up between Moscow and Kiev. Over the weekend, Russia warned of sending more troops to the Crimean peninsula following an alleged attack by unknown Kiev gunman on Crimean government offices. Many pundits who follow the two countries closely suspect a civil war in the worst case scenario, with Crimea becoming even more independent from Kiev and leaning more towards Russia.

Deutsche Bank’s view is that Crimea will no longer be governed by Kiev, but won’t be controlled by Moscow either. Most likely it will receive a status of a special territory, with Russia having a larger influence than it does now. Russia’s historic Black Sea Fleet is docked at a naval base on the peninsula, so the country already has a strong military presence in southeast Ukraine.

Deutsche Bank also doubts that Russia will invade Ukraine’s mainland and will seek to avoid a military conflict.

But that won’t ease pressure on Russian assets anytime soon. And likely not until Ukrainian elections scheduled for May.

Both Russian and Ukrainian asset markets are expected to decline further, according to Deutsche Asset & Wealth Management. Wide-spread contagion will be dispersed across asset classes. Russian energy companies are likely to be hit especially in case of delayed or failed payments for natural gas deliveries from Ukraine. Global fixed income markets should remain better contained unless the crisis evolves further and turns into a full fledged military conflict. Global equity markets, trading near all-time highs need to be monitored closely for signs of wider contagion. And currency markets may see some support for safe-havens like the dollar, yen, and Swiss Franc in particular. Emerging market currencies will remain under pressure.

“We think Ukraine is likely to end up in a different place than Syria,” said Jan Dehn, head of research at Ashmore Group in London. “Ukraine already has a new government and much now depends on the strength of its leadership. Its primary task is to establish economic stability, which in turn will generate greater legitimacy. Strong leadership will also force the E.U., U.S. and Russia to work on Ukraine’s priorities, not the other way around.”

Putin received approval for the use of troops in Ukraine from parliament this weekend, but Russian officials like Foreign Minister Sergei Lavrov swear that does not necessarily mean he will use it. Putin has support of a majority of the Crimea population. Much less support in most of Ukraine.

A referendum on the future of the region will be held on March 30th with the likelihood of a pro-Russian outcome for Crimea. According to Russian Television, there were pro-Russia rallies in Donetsk, Lugansk and Kharkiv, Ukraine’s industrial heartland.

The Obama Administration has threatened sanctions and isolation of Russia in the case of an over-reaction. The E.U. has condemned any military moves by Moscow, but has not sided with Washington on sanctions. Russia is a major natural gas supplier to Europe, so sanctions could prove just as costly. Meanwhile, China has issued a rather ambiguous official commentary about the whole sordid affair, coming out in support of territorial integrity.

For now, this appears to be a Russia vs. the West re-enactment of old historic wounds in the Crimea.

If the crisis remains focused on Crimea and no further intervention within Ukraine evolves, financial markets may deem this event as regional, Deutsche Asset & Wealth Management said in a note to clients today. In the best case scenario, global contagion should be limited and recede after initial sparks.

Source: Forbes Business

 
Update
2

4 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

4 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and MH17" hi ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Breathe easy with 'Lung Flute'
New York, Sep 28 (IANS) An Indian-origin scientist has developed a hand-held "lung flute" that allows patients suffering from chronic obstructive pulmonary disease (COPD) to clear lung mucus simply by blowing into the respiratory device.
 
 
Millennials addicted to smartphones
New York, Sep 28 (IANS) The millennials are in awe of their smartphones, with nearly 90 percent admitting they never leave their devices during the day, says a new survey.
 
 
Facebook can steer young minds into politics
Sydney, Sep 28 (IANS) The Social networking site Facebook can encourage more young people to get engaged in politics, a new research shows.
 
 
Beware! Anti-odour clothes may leave you smelly
Toronto, Sep 28 (IANS) Planning to buy an anti-odour shirt to stay fresh all day long? Think again as new research shows that anti-odour clothing may not be living up to its promise.
 
 
 

Latest from the Network

Beyonce, Jay Z to document marriage problems?
Los Angeles, Sep 28 (IANS) Singer Beyoncé Knowles and her husband-rapper Jay Z will reportedly detail their recent marriage difficulties on their upcoming album. The couple's marriage was rumoured to be on the rocks...
Read more on Celebrity Balla
 
Paltrow's star-studded birthday bash
Los Angeles, Sep 28 (IANS) Actress Gwyneth Paltrow celebrated her first birthday since her split from husband Chris Martin by gathering her Hollywood friends for a dinner party here. The bash took place Friday night....
Read more on Celebrity Balla
 
Breathe easy with 'Lung Flute'
New York, Sep 28 (IANS) An Indian-origin scientist has developed a hand-held "lung flute" that allows patients suffering from chronic obstructive pulmonary disease (COPD) to clear lung mucus simply by blowing into the...
Read more on Business Balla
 
Lindsay Lohan defends theatre debut
London, Sep 28 (IANS) Actress Lindsay Lohan has defended her West End theatre debut after she was accused of forgetting her lines in her first show, insisting the performance "could have been a disaster... but it wasn'...
Read more on Celebrity Balla
 
$500,000 diamond ring stolen in Australia
Sydney, Sep 28 (IANS) A diamond ring worth half-a-million dollars was stolen from an auction site in Australia, media reported Sunday. The pink argyle and white diamond ring, valued at 577,000 Australian dollars ($500...
Read more on Politics Balla
 
Man pours boiling water on wife in Saudi Arabia
Riyadh, Sep 28 (IANS) Police have arrested a man in Saudi Arabia for pouring boiling water on his wife following a dispute, a media report said Sunday. The man, a drug addict, last week poured boiling water on his 35-...
Read more on Politics Balla
 
30 dead in Japan volcano eruption
Tokyo, Sep 28 (IANS) At least 30 people were killed and some 250 others were trapped due to falling rocks and volcanic ash following a sudden volcanic eruption in central Japan, media reports said Sunday. The bodies...
Read more on Politics Balla
 
Asian Games: Rajiv, Povamma win bronze in men and women's 400m
Incheon, Sep 28 (IANS) Indian quartermilers Arokia Rajiv and M. Povamma Raju put up a fine show to clinch the bronze medals in the men and women's 400 metre events, respectively, at the Incheon Asiad Main Stadium in...
Read more on Sport Balla
 
Modi gets Nepal's support for International Yoga Day
Kathmandu, Sep 28 (IANS) Nepal has supported Indian Prime Minister Narendra Modi's call for an International Yoga Day enunciated during his speech at the 69th session of the UN General Assembly. Hailing Nepal's...
Read more on Politics Balla
 
US drone strike kills two in Pakistan
Islamabad, Sep 28 (IANS) At least two people were killed and four injured in a US drone attack in Pakistan Sunday, a media report said. An unmanned aircraft fired two missiles at a vehicle in Wana area of South...
Read more on Politics Balla