Potential impact of the Russia-Ukraine tensions – UOB

UOB Group’s Head of Research Suan Teck Kin, CFA, and Economist Lee Sue Ann comment on the probable effects of the ongoing geopolitical effervescence in the Russia-Ukraine conflict.

Key Takeaways

“Brewing tensions between Russia and Ukraine have escalated rapidly. This comes after Russian President Vladimir Putin, on Mon (21 Feb), ordered troops into two breakaway regions of eastern Ukraine after announcing that he would recognize their independence. The White House has responded by levying a number of sanctions on the region.”

“The Russian economy ranks outside of the top 10 in the world. And while it is known for its exports of oil and gas and other resources, its trade volume is relatively small compared to the countries of the same size. Russia has also been making defensive moves to minimize damages from financial sanctions, especially after the round imposed in Mar 2014 following the conflict over Crimea.”

“Nonetheless, the situation remains very fluid, and this has kept the world watching and waiting to see what Putin will do next and how the US and Europe will be responding. As it is, the latest news has fueled the return of investor demands for traditional safe havens like gold, US Treasuries, JPY and CHF.”