Russian gold miner Polymetal and mining company Evraz, backed by Russian billionaire Roman Abramovich, among top 10 most traded investments on interactive investor this morning (24 February 2022).
JP Morgan Russian Securities investment trust ranks fourth in the list of most bought funds, investment trust and ETFs on interactive this week (21 to market close 23 February)
interactive investor, UK’s second-largest DIY investment platform, explores the financial dimensions of this unfolding humanitarian crisis.
Richard Hunter, Head of Markets, interactive investor, says: “The escalation of tensions arising from the Russian action today has pulled the rug from markets, adding to an already brittle environment in the face of rising inflation and interest rate concerns.
“The negative baton is being passed from market to market globally. The oil price, which has now risen by 35% in the year to date, has prompted inevitable interest in the majors, although BP’s exposure to Russia via Rosneft has been of some concern. BP nonetheless remains ahead by 13% in 2022, and Shell by 24%.
“Victoria Scholar, Head of Investment, interactive investor, adds: “Unsurprisingly, Russian assets, as well as Russian-exposed assets, have taken the hardest hit as the perilous prospect of war, sanctions, and other penalties look set to cripple Russia’s already fragile economy.
“International investor confidence in Russia has been shattered by Putin’s aggression, sending its equity index, the MOEX, down nearly 50% at one stage – its worst day on record. This even prompted the Bank of Russia to temporarily ban short selling to stem to freefall.
“Currency traders have also abandoned the Russian rouble, which has fallen to a record low against the US dollar.”
“In London, Russian gold miner Polymetal has shed more than 35% intraday, while mining company Evraz, backed by Russian billionaire Roman Abramovich, is down more than 30%, both languishing at the bottom of the FTSE 100.
“However, the UK index has fallen less than some other European bourses due to its exposure to oil and gas. Declines in Russianminers and financial stocks have been tempered by sharp gains in energy, lifting shares in Shell, for example, by more than 4%, making it one of just a handful of gainers on the FTSE 100 today.
“BAE Systems is bucking the downtrend, buoyed by the possibility of strong demand for defence amid the conflict, while precious metals miner Fresnillo is catching a bid as investors flock to safe havens in the hope of preserving their wealth.”
Richard Hunter, Head of Markets, interactive investor, explains: “If there is a glimmer of hope among the volatility, which has become a feature of this year even without the latest developments, it is that there will have been certain sectors caught in this crossfire which will have simply been oversold. Such businesses, whose fundamentals will not have changed overnight, will potentially lead the charge as and when sentiment improves.”
“For the moment, matters need to stabilise at a macro level before any sort of market recovery can be entertained. It is impossible to call the bottom in markets such as these, and difficult to anticipate positive catalysts, but turmoil such as this can provide buying opportunities. That particular message seems to be resonating with some of our more steely customers, whose contrarian views are resulting in some interesting buying activity.
“One of the few factors that can be guaranteed in the shorter term is volatility. By the same token, investment is a marathon not a sprint and however difficult that may be to remember in this environment, it should also offer some solace to long-term investors.”
Victoria Scholar, Head of Investment, interactive investor, adds: “The market was already very volatile at the start of the year, sparked by rising inflation and monetary tightening. Now, with the added uncertainty from Ukraine’s invasion by Russia, markets are likely to remain on edge with strong demand for safe-haven stocks. The imbalance between demand and supply, coupled with geopolitical uncertainty looks set to continue to support an uptrend for oil stocks. Plus, the Ukraine conflict could lead to a surge in cybersecurity attacks from Russian organizations, which in turn may see an upsurge in demand for stocks within the cybersecurity sector.”
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