Unpacking Russia-Ukraine Tensions
ADDED:
25 February 2022
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Updates on Ukraine 

Russia has launched a full-scale military invasion of Ukraine and demanded Kyiv’s army lay down its weapons, launching what could be the largest conflict in Europe since the second world war.

In an address broadcast on state television on Thursday, Russia’s president claimed that he was not planning to occupy Ukraine but vowed Moscow would punish all those who stood in its way. Western powers has announced sweeping sanctions on Russia as the conflict enters its second day.

Market Views

While it is difficult to ascertain Putin’s end game, the current situation appears that Russia is intent on invading Ukraine while seizing Kiev (the capital), so that they can install a new government that will be pro-Russia and renounce any future intentions of joining NATO.

Regardless of the above scenarios, the following should be taken into consideration:

  • Ukraine is NOT a member of NATO. NATO is thus not legally bound to defend Ukraine from a military attack. It is thus highly unlikely that NATO and US will engage in a direct armed conflict with Russia.
  • Russian military aggression is likely to be confined to Ukraine and not spill over to neighbouring NATO members such as Poland
  • The situation remains very fluid. The quality of information during an armed conflict will be poor.

Portfolio positioning

Regional equity funds already have decent cash levels of 15-20%.

While past history has shown that armed conflicts will lead to a period of drawdowns but ultimately recover, we remain on the cautionary side as the US Federal Reserve (Fed) is slated to hike rates and embark on quantitative tightening.

Furthermore, a rise in energy and commodity prices could cause inflation to last longer, making it difficult for the Fed to back away from any tightening measures.

We currently do not have any direct exposure to Russian equities

Disclaimer
This article has been prepared by Affin Hwang Asset Management Berhad (hereinafter referred to as “Affin Hwang AM”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to Affin Hwang AM and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of Affin Hwang AM.

The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, Affin Hwang AM makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions.

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TENG CHEE WAI

Managing Director
Teng Chee Wai is the founder of Affin Hwang Asset Management Berhad (Affin Hwang AM). Over the past decade, he has built the Company to be the fastest growing and only independent investment management house in Malaysia’s top three, with an excess of RM47 billion in assets under management as at 31 December 2018.​

​In his capacity as Managing Director / Executive Director, Teng manages the overall business and strategic direction as well as the management of the investment team. His hands-on approach sees him actively involved in investments, product development and marketing. Teng’s critical leadership and regular participation in reviewing and assessing strategies and performance has been pivotal in allowing the Company to successfully navigate the economically turbulent decade.

Teng’s investment management experience spans more than 20 years, and his key area of expertise is in managing absolute return mandates for insurance assets and investment-linked funds in both Singapore and Malaysia. Prior to his current appointments, he was the Assistant General Manager (Investment) of Overseas Assurance Corporation (OAC) and was responsible for the investment function of the Group Overseas Assurance Corporation Ltd.​

​Teng began his career in the financial industry as an Investment Manager with NTUC Income, Singapore. He is a Bachelor of Science graduate from the National University of Singapore and has a Post-Graduate Diploma in Actuarial Studies from City University in London.
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