Russia’s attack on Ukraine, and deeper sanctions from the US, may not be a sign of another global recession. That’s because the two countries collectively account for less than 2% of the world’s GDP. And many regional economies are in solid shape, having rebounded from the pandemic slump.
Yet the Russia Ukraine conflict threatens serious economic ramifications on some countries and industries — destruction that may mean hardships for millions.
Besides, Russia is the world’s third-biggest producer of petroleum and a major exporter of natural gas. Hence, the Russia Ukraine crisis is expected to isolate the world’s 11th-largest economy and one of its largest commodity producers. And the immediate global implications will range anywhere between higher inflation, lower growth, and disruption to financial markets as sanctions take hold.
How are global markets doing?
With the Ukraine crisis flaring up, Asia-Pacific shares fell amid concerns over supply chain disruptions and expected sanctions. Brent oil crossed the $ 100 mark. Gold, a safe asset in times of market volatility, rose 1%. Stock markets in Hong Kong, Japan, South Korea, and Australia were down by up to 3%. Dow Jones fell 1.38%, and Nasdaq lost 2.6% before the military operations were underway.
Close to home, domestic stock markets plunged by over 3% and joined a global stock sell-off as the rising crude oil price hit the sentiment. The Sensex opened with a loss of up to 1,800 points. Most sectoral indices, including telecom, IT, auto, realty, metal, etc., are in the red with a loss of up to 4%.
Additional Read – Russia Ukraine Conflict: What Does It Mean for Investors?
What should stock and mutual funds investors do?
Unless it is absolutely important, it’s counterproductive to panic and sell. Whether you want to buy stocks or units of an MF scheme entirely depends on your risk appetite. Since MF investments perform well over time, continue with your SIP if you have a long-term investment plan. There’s no need to break your investment.
On the other hand, the market falling off sky-high levels give you the chance to purchase stocks at discounted rates. You can pick up good quality stocks as the big correction will provide you with an opportunity to collect attractive returns. If you purchase stocks, stick to the fairly valued segments with good earnings visibility.
Similarly, mutual funds work through compounding and turn into a large corpus over the long term. This means the longer is your investment horizon, the higher are the chances of increased profits. You must give your investment time in the market for it to perform well. For that, you must ignore short-term dips in the market.
Also, MF SIPs function on rupee cost averaging. This means your investments will benefit you irrespective of the market cycles. Moreover, your decisions should be based on your financial objectives, investment horizon, risk appetite, and not on market prices when it comes to MF investments. If you try to time the markets, it might go against your interest as an MF investor.
Additional Read – Russia-Ukraine Crisis: What Should Investors Do?
Over to you
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