10 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...

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21 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
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told to ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robb ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hisham ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 mil ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Da ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involvi ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 201 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) today. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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