Ukraine crisis is Russian roulette for investors

Is it a cheap buying opportunity or should the whole region be avoided? Simon Read asks the experts

When markets fall, it's a natural reaction to think of fleeing and cutting your losses. But seasoned investors know that when people panic, there are often plenty of cheap buying opportunities.

The continuing crisis in Ukraine had a marked effect on markets this week. On Monday it looked like the start of a financial disaster, with the Footsie falling by 101 points. A degree of recovery on Tuesday saw things settle down for the rest of the week, with markets watching and waiting as events unfold. But what about those with investments in Ukraine or Russia? Now is the time to decide whether to carry on or cash out.

What do the experts think? "The political risk of the Ukraine outweighs the potential likely returns," said Slim Feriani, chief investment officer of Advance Emerging Capital. "Russia, however, is a different story; the country holds strong current account and foreign exchange surpluses, as opposed to the 'fragile five' [Indonesia, South Africa, Brazil, Turkey and India], and we think that current valuations represent a decent entry point for patient long-term investors."

Matthias Siller, fund manager of Baring Emerging Europe, said: "Ukraine's economy remains weak with further help required for it to meet its external obligations. Looking ahead, presidential elections are scheduled in Ukraine for 25 May.

With Crimea's parliament also having called a referendum on the autonomous region's future, he added, there is too much uncertainty around Ukraine. "In my view, until the political direction of the country becomes clearer following the elections, the situation will remain in flux. This is likely to be a protracted situation, with so much now depending on the new government after the elections."

Asoka Wöhrmann, co-chief investment officer of Deutsche Asset & Wealth Management, believes the investment fallout could spread well beyond Ukraine: "The entire situation bodes bad – especially for Russian assets but also for the entire region of Eastern Europe including Turkey, as 12 per cent of Crimeans are Tatars who have historical ties with Turkey and dislike Russia.

"So Russian and Ukrainian asset markets are likely to remain under selling pressure," he predicted.

In short, as Dr Feriani said: "Investing in emerging and frontier markets requires investors to be patient and long term."

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Voices
Oscar Pistorius is led out of court in Pretoria. Pistorius received a five-year prison sentence for culpable homicide by judge Thokozile Masipais for the killing of his girlfriend Reeva Steenkamp
voicesThokozile Masipa simply had no choice but to jail the athlete
Arts and Entertainment
Sister Cristina Scuccia sings 'Like a Virgin' in Venice
music

Like Madonna, Sister Cristina Scuccia's video is also set in Venice

Arts and Entertainment
James Blunt's debut album Back to Bedlam shot him to fame in 2004
music

Singer says the track was 'force-fed down people's throats'

News
i100
Life and Style
The Tinder app has around 10 million users worldwide

techThe original free dating app will remain the same, developers say

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Helpdesk Analyst

    £23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

    Senior Helpdesk Analyst / Service Desk Co-ordinator

    £27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

    Senior Pensions Administrator

    £23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

    Corporate Actions Administrator / Operations Administrator

    £25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

    Day In a Page

    Two super-sized ships have cruised into British waters, but how big can these behemoths get?

    Super-sized ships: How big can they get?

    Two of the largest vessels in the world cruised into UK waters last week
    British doctors on brink of 'cure' for paralysis with spinal cord treatment

    British doctors on brink of cure for paralysis

    Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
    Let's talk about loss

    We need to talk about loss

    Secrecy and silence surround stillbirth
    Will there be an all-female mission to Mars?

    Will there be an all-female mission to Mars?

    Women may be better suited to space travel than men are
    Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

    'They poured water on, then electrified me...'

    If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
    James Wharton: The former Guard now fighting discrimination against gay soldiers

    The former Guard now fighting discrimination against gay soldiers

    Life after the Army has brought new battles for the LGBT activist James Wharton
    Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

    Panic over Ebola threatens to infect the midterms

    Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
    Premier League coaches join the RSC to swap the tricks of their trades

    Darling, you were fabulous! But offside...

    Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
    How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

    How to dress with authority

    Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
    New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

    New book on Ian Curtis sheds fresh light on the life of the late singer

    'Joy Division were making art... Ian was for real' says author Jon Savage
    Sean Harris: A rare interview with British acting's secret weapon

    Sean Harris: A rare interview with British acting's secret weapon

    The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
    Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

    Tim Minchin interview

    For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
    Boris Johnson's boozing won't win the puritan vote

    Boris's boozing won't win the puritan vote

    Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
    Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

    Tim Wheeler: Alzheimer's, memories and my dad

    Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album