Following the escalation of Russia-Ukraine tensions into a conflict, we are being watchful of a potential stagflation scenario, should the situation intensify. Elevated oil prices for a prolonged period could undermine confidence and hurt the nascent recovery as the world is just preparing for a post-pandemic resumption of activities.
While staying cautious over the development of conflict in Ukraine, we have identified potential winners and losers from the crisis:
Positive reaction in markets
- Oil
- Oil majors and energy exposure
- Gold
- Gold mining sector
- Commodity exporters
- Treasuries and high grade credit
- EM GCC/LatAm credit
- US equities
- Semiconductor upstream supply chain
- Health care
Negative reaction in markets
- Banks with Russian exposure
- Germany
- Asian net oil importers
- Russian credit/other assets
- EM Central and Eastern Europe (CEE) credit