LONDON, March 8 – Moscow’s incursion into Ukraine, from European banks to the Polish zloty, has caused massive price drops and a string of asset winners that investors are rushing to stock up on.
Commodity prices are skyrocketing, defense stocks are benefiting from higher security spending commitments, and emerging market investors are taking refuge in Latin America. As the world is still flooded with cheap pandemic-era money, many assets are showing attractive moves.
Below is a list of some of the winners. All price movements have occurred since February 24, the day of the Russian invasion. Russia calls its actions a “special operation”. More
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COMMODITY SHARES
A 30 percent jump in oil prices after Moscow brought troops and tanks into Ukraine spurred stocks in energy producers. The SPDR S&P Oil & Gas Index rose 14%, with some individual energy companies up much more.
Commodity prices are rising
The large role of Russia in metallurgy has led to an even greater jump in prices for other commodities.
It supplies about 10% of the world’s nickel, and concerns about supplies from Russia and a short-term cut have seen London’s three-month nickel prices quadruple since the invasion to a record high of over $100,000 a tonne. This prompted the London Metal Exchange to suspend trading on Tuesday. More
Russia and Ukraine together account for about 29% of world wheat exports and 19% of corn exports. Wheat futures in Chicago jumped 40% to a 14-year high.
The S&P GSCI (.SPGSCI), a composite commodity yield index, has risen 24% since Feb. 24 and is 9% below the all-time highs hit in 2008.
Commodity trading firms are also thriving. Glencore (GLEN.L) was up 15%, Archer-Daniels-Midland was up 13% and agribusiness Bunge was up 11%.
COMMODITY CURRENCIES
Currencies of countries-exporters of commodities show the best dynamics.
The Australian and New Zealand dollars have risen nearly 1% since the invasion.
These moves are striking because both currencies usually struggle when global market sentiment deteriorates and traders tend to look for safer assets such as the Swiss franc and the US dollar, which are also strong.
Performance G10FX
The Norwegian krone, boosted by rising prices for Norway’s main export commodity, oil, rose 2.7% against the euro.
Emerging market currencies tend to weaken in the face of a strong dollar, but the currencies of resource-rich South Africa and Brazil also performed well. ,
SUN AND WIND
The S&P Global Clean Energy Index (.SPGTCLEN) gained 14.6% after invading a bet that Western countries will be more eager to move away from fossil fuels.
Wind energy suppliers Nordex (NDXG.DE) and Vestas Wind (VWS.CO) have risen in price by about 50%. Citi believes that many European companies could see a sharp increase in revenue if Germany follows through with its plans to expand wind power.
Solar ETF Invesco (TAN.P) climbed 31%.
DEFENSE AND CYBER
Manufacturers of aircraft, missiles and radar will benefit greatly after several European countries, Germany in particular, have pledged to spend more on defense. More
Since Feb. 24, arms companies have dominated the MSCI World Index leaderboard, led by German military sensor maker Hensoldt (HAGG.DE) and armored vehicle maker Rheinmetall rising 60-80%.
Raytheon (RTX.N), a US firm that makes the Stinger missiles that Western allies send to Ukraine, is up about 15%.
SPDR S&P Aerospace and Defense ETF (XAR.P) up 11%.
Protective ETF
The Global X Cybersecurity ETF (BUG.O), which includes Check Point Software Technologies (CHKP.O) and Palo Alto Networks, added 9%.
“Cyber is one of our long-term priorities, and this crisis has proven that once again,” said Kiran Ganesh of UBS Global Wealth Management.
He said that many sustainability-minded investors routinely rule out defense stocks, but “this is a discussion the industry should have … many argue that security is also a public good.”
IN LATAM
Investors are heading to Latin American markets, which are saturated with commodities and more protected from Russia’s negative effects than other emerging markets.
Data from the Institute of International Finance shows that Latin American markets received $8.7 billion in investment and emerging Asia received $6.8 billion in February.
Latham shares
The MSCI Latin America Index (.MILA00000PUS) is up from pre-invasion levels, while its materials sub-index (.MILA0MT00PUS) has jumped 16% since Feb. 24.
“The commodity factor — whether it be agricultural commodities or metals — is supporting capital inflows into Latin America,” said Jeremy Schwartz, chief investment officer at asset management firm WisdomTree.
PROTECTION AGAINST INFLATION
As the surge in commodities threatens to lift inflation even further, inflation-linked bonds have come out on top, especially in the eurozone, where they have gained 7% since the invasion, the BofA index shows.
The rally is most dramatic for short-term linkers, with German two-year yields down 190 basis points since the invasion.
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Additional report by Eileen Soreng and Yoruk Bahceli; editing by Barbara Lewis
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