CHRIS BURRELL ’ S BLOG
Ukraine is not World War III
The terrible events over the past fortnight as a result of the Russian war against Ukraine have preoccupied markets .
Putin as the master at the art of bluff has sought to use the nuclear deterrent in a way not previously thought likely in this day and age . Understandably , it has taken the Western world some time to formulate a strategy , but we are seeing the seizing of $ 600B of Russian central bank reserves , mostly in Western banks , as the most important sanction and the one most likely not factored in by Putin . These funds can be utilised to directly repay debt when Russia defaults , to contribute to a ‘ Marshall Plan ’ run by adjacent countries to rebuild Ukraine and for reparations generally . This means the Russian people / Putin are effectively paying for every building that they destroy .
While markets have understandably gone into a frenzy , your diarist thinks the likely outcome is more benign in the sense that the duration of the war will not be long and a truce will be negotiated .
On this view , it makes sense from a portfolio viewpoint to take some profits in the energy sector , particularly where holdings are overweight , to consider likewise materials and in turn to nibble at those stocks showing good value in the Value and Growth at Reasonable Price ( GARP ) sectors of the market .
There have been a series of broader issues concerning interest rates , inflation etc . but the immediate focus should be on the price dislocations caused by the Russia / Ukraine war .
Happy Investing
Chris Burrell Managing Director
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