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Market concerns regarding the Russian military incursion in Ukraine
David Walls, Head of Retail Investment – Zurich Insurance plc.


Global equities have fallen so far in 2022, partly due to the shifting narrative in relation to inflation and monetary policy. In recent trading days, especially yesterday and today, the geopolitical concerns surrounding what has ultimately transpired to be Russian military incursions into Ukraine have negatively affected markets.

As stated in our annual investment outlook ‘markets are finely poised with shifting inflation expectations and the potential for a policy misstep contributing to a possible bumpy road ahead.’ We also raised a number of key risks for the year ahead including the potential that ‘Geopolitical fears are realised at a number of global flashpoints’ and a ‘A policy misstep materialises as global central bank policy diverges’. These comments remain valid today.

Russia accounts for approximately 1/3 of gas consumed in Europe and this has clearly complicated the position of various European countries to date. Additionally, Russia is a source of oil and other valuable commodities which are essential to normal economic activity, many of which are already in high demand/constrained supply situations.

The standard ‘knee-jerk’ reactions in financial markets have occurred; namely equities and risk assets lower, safe-haven assets such as gold are higher, and commodity prices such as oil are higher.

These developments certainly complicate both the monetary and fiscal policy environment, but central banks and governments have various levers they can deploy to allay market nervousness and address unanticipated price pressures. The short-term developments at play today also form part of a larger debate about globalisation, energy policy, and security issues which countries and markets will digest over the months and years ahead.

Predictions are not part of our investment process, but it is probably safe to assume that nervousness will persist until Russia brings some clarity to its immediate intentions.

In summary, as we observe investment markets through the lens of our top-down active investment process, we maintain our current asset allocation position. Buying into panics, and situations similar to what we are currently observing, has often been the profitable approach – even if difficult in the very short term. For now, notwithstanding the ability we have within our portfolios to add to our risk assets, we will stay as we are.

However, this does not preclude us from future action as the market narrative develops. As always, maintaining an active, flexible approach is warranted.


Bluechip Financial Consultants Ltd, Feb 2022.

Bluechip Financial Services 

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