The Russo-Ukrainian war has once again turned investment roulette around, reminding us that the capital market must constantly have its hand on the pulse, and its eyes on the horizon of future opportunities. While an international crisis is shaking the world markets no less than the corona that burst into our lives about two years earlier, in the capital market there are already those working to turn a pessimistic lemon into an optimistic lemonade. Sergei Vaschonok, a senior analyst at Oppenheimer Investment House, told Walla! Money and Maariv Business, because an examination of the behavior of the stock exchanges in past wars “shows that the capital market does not respond to wars like the economies themselves.”
“Therefore, perhaps before examining the trading companies, it is worth looking at the economies in which they operate. If we examine the two stock exchanges at the poles of the Cold War, then while the Russian capital market crashes along with the Russian economy in the shadow of international sanctions, the US stock market less. This is because its economy is less exposed to Russia. “
“European markets, however, and especially its banking sector, are likely to face greater difficulties, as they are more exposed to the world’s largest continent. “It takes place in Iran or North Korea, because it will not be possible to trade on the Moscow Stock Exchange in light of the sanctions.”
But not only the capital market bowl of the Russian bear was emptied. Many sectors are still suffering from the uncertainty created by the war – even in the US stock market. The financial and aviation sectors, for example, have absorbed the page changing investors’ money routing towards war opportunities. “Some areas have become an opportunity in the wake of the Russia-Ukraine crisis,” Vaschunok continues, “such as the oil and gas sector, which experienced severe declines in the corona but returned to green light as the world economy returned to routine and the high demand for available and immediate energy.”
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“The war raises even more the demand for available energy, hence the demand for oil, as sanctions on Russia will lower the supply of oil from this side of the globe and raise its price. A larger market share, which will be acquired in the near term at higher prices. “
Two of those companies, for example, are the American ConocoPhillips and Occidental Petroleum, which are traded on Wall Street in the US at a value of $ 131.5 billion and $ 51.7 billion respectively. Since Russia invaded Ukraine about two weeks ago (February 24, 2022) their share has soared on 15.4 % And 42.3% respectively, adding tens of billions of dollars to their value.
“Another area that some see as an opportunity,” explains Vaschonok, “is the area of ​​fertilizers and potash, which is essential for agricultural markets around the world, which are also in short supply. With the halt in fertilizer exports from Russia, fertilizer supply will only decrease while demand remains. “Farmers around the world are now beginning the insemination and fertilization period.”
It is clear that investors understand this well, and since Russia’s invasion of Ukraine have begun to fertilize the stock of the field. For example, the American fertilizer companies The Mosaic company and Nutrien jumped by 34.8% and 28.2%, respectively, in the same period (see table).
For the fertilizer giants, which are also traded on Wall Street in the US at a value of $ 21.1 billion and $ 53.2 billion respectively, this is an addition of billions of dollars to the equivalent. War-era investments – gold and security Gold is always seen as an opportunity in times of uncertainty and war, as investors find in gold reserves an asset that retains its value in precisely such periods.
Alongside the gold, the field of security is also an issue in times of war and security uncertainty, and the investment spotlight is also directed at the defense industry. In addition it should be borne in mind that the humanitarian catastrophe of Ukrainian refugees also leads to immigration, and the latter is a positive thing for economies. Canada’s economy, for example, benefits from the war between Russia and Ukraine, as it is also a neighbor of the United States and will enjoy proximity to it, also contains oil and potash production activities, resources that will be required more, and craves additional working hands that immigration from Ukraine and Russia can provide.
“China’s economy is also expected to benefit, as the Asian country does not participate in sanctions on Russia, and is expected to be the one to purchase Russian oil and gas, and likely at lower prices relative to the world,” says Vaschonok. Compared to estimates of the basket of opportunities awaiting experienced investors in the capital market, forecasts concerning the world economies are not encouraging.
“Europe has a recession right now,” says Vaschonok, “and it’s harder than the US is expected to experience. She will probably experience it more easily. Factually, whenever the price of a barrel of oil exceeds the $ 100 mark, there is a strong acceleration towards the US recession.
“This time, the recession will be accompanied by inflation, which usually does not go together, but now they are joining forces as a result of rising commodity prices – an unstoppable external influence. “It harms not only the economy, but also human life. Examining the rise in wheat prices alone, for example, will greatly affect certain areas of the world. In Israel or the Western world, rising bread prices from NIS 5 to NIS 10 may hurt your pocket, but it will probably not lead to hunger.” .
“In Egypt and Africa, however, millions of people are expected to die as a result. It is worth remembering that one of the triggers for the Arab Spring was a surge in world wheat prices, which led to a reduction in wheat supply in stores in Egypt.” “Most of the capital serves the fighting. But it is clear that there are investors who have found out how the war actually serves their capital. And yet, I am confident that all investors in the international capital markets would be happy to return to find opportunities for yield in peacetime.