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Volatility Returns As the Crisis In Ukraine Creates Market Uncertainty
Photo Credit: Forbes Business

Volatility Returns As the Crisis In Ukraine Creates Market Uncertainty

Mar 4 2014, 6:45pm CST | by

Some investors may have never even heard of Ukraine prior to the last two weeks. Now the future of Ukraine and potential repercussions on other countries in the region appear to be at the forefront...

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20 weeks ago

Volatility Returns As the Crisis In Ukraine Creates Market Uncertainty

Mar 4 2014, 6:45pm CST | by

Some investors may have never even heard of Ukraine prior to the last two weeks. Now the future of Ukraine and potential repercussions on other countries in the region appear to be at the forefront of investor minds across the globe.

Overall, Ukraine is a relatively small country in Eastern Europe with a population of about 46 million people that borders the likes of Russia, Belarus, Poland, Slovakia, Hungary, Romania and Moldova. Not known for much outside of fertile farm grounds, Ukraine was thrust into worldwide headlines when it removed its President on February 22, largely in response to mass, ongoing but intensified anti-government protests in the country that left many dead or wounded.

Russia decided to step in with its military to purportedly protect its citizens residing in Crimea (one of the regions of eastern Ukraine), but many fear that this action may be an attempt by Russia to potentially take control of the region entirely and the start of a more wide reaching military campaign.

Source: Justmaps.org

While it is not clear what will happen next in Ukraine and if the crisis will escalate into a larger scale international event, it is clear that some investors are nervous. As a result, volatility has returned to the stock market. As the market closed on March 3, the Dow Jones Industrial Average declined nearly 154 points for the day, representing an approximate 1% daily drop. Losses were more severe in other asset classes and sectors of the market though as seen through certain well-known exchange-traded funds.

For example, International Emerging Market Equities, as represented by the iShares MSCI Emerging Markets ETF (EEM), finished down nearly 2% for the day and International Developed Market Equities, as represented by the iShares MSCI EAFE ETF (EFA), lost more than 2% for the day.

Most other major equity asset classes and sectors followed suit with the “risk off” market retreat while bond market and non-traditional/alternative asset classes such as precious metals, gold and silver, agricultural commodities, energy commodities and real estate investment trusts (REITs) appeared to be some of the benefactors of this short term volatility.

This recent market volatility, which may prove to be shorter term in nature than some currently fear and is the second significant crisis in the Emerging Markets already this year, should serve as a reminder of the importance of asset allocation in a properly constructed growth portfolio.

Asset allocation remains of the upmost importance, in my view, and should always be constructed in accordance with one’s investment objectives, investment timeframe and tolerance for risk. While past performance cannot guarantee future results and asset allocation cannot ensure a profit or protect against a loss, applying a historical perspective and maintaining an appropriate strategic asset allocation can help provide comfort and direction to investors during periods of great volatility – whether these periods are short term or long term.

Investors would be wise to look for areas of low correlation in non-traditional asset classes and sectors in an effort to not only provide for additional diversification but also to help  find additional pockets of risk-adjusted growth potential in 2014.

Disclosure:  The information provided is for educational purposes only and should not be misconstrued as a solicitation to purchase or sell any of the securities mentioned.  Hennion & Walsh Asset Management currently has allocations within its managed money program and Hennion & Walsh currently has allocations within certain SmartTrust® Unit Investment Trusts (UITs) consistent with several of the investment themes cited above.

Source: Forbes Business

 
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10

6 weeks ago

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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 Hi ...
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

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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 ...
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

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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 Datuk S ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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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

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JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 mi ...
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

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 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 ( ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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