Event:
On February 24, Russian President Vladimir Putin announced a special military operation in Donbas, and Russian troops entered many regions of Ukraine. Including the explosion in Kiev, the capital of Ukraine. We believe that in the short term, major economies may not be involved in the Russian Ukrainian conflict at the military level, with limited impact on the global economy; However, in the medium and long term, this event may have a far-reaching impact on the post-war global order. For the asset market, global risk assets such as stocks may be impacted in the short term, but they are expected to be repaired in the later stage; Commodity prices or phases are supported; In the medium and long term, it is beneficial to the military industry and the theme of independent control.
Key investment points:
The background of the conflict between Russia and Ukraine is complex
Ukraine is a member Republic of the former Soviet Union. After the disintegration of the Soviet Union, there has been a contradiction between pro Russian (mainly Russian) and pro western (mainly Ukrainian). NATO's eastward expansion has compressed Russia's strategic and security space. Ukraine's non accession to NATO is the core interest of Russia's security. However, in 2014, the pro Western Ukrainian faction came to power, and the pro Russian forces were suppressed in Ukraine, which not only led to Russia's occupation of Crimea belonging to Ukraine (mainly Russian), but also led to tensions between Russia and Ukraine. We believe that Russia's choice to use force during this period may be related to the improvement of Russia's finance under high oil prices. Its potential demands may include Ukraine's commitment not to join NATO, the full autonomy of some pro Russian regions in Ukraine, or even the establishment of a pro Russian regime in Ukraine.
In the short term, the possibility of military involvement of other major powers is not high, and the impact on the world economy is limited
Whether Ukraine is occupied by Russian forces and establishes a new regime, or Ukraine negotiates with Russia, or Russia falls into a protracted war in Ukraine, from the standpoint of major countries in the United States and Europe, the short-term may be dominated by economic sanctions - the United States has announced a new round of sanctions. Considering that Russia and Ukraine account for about 1.9% of the global economy, their direct impact on the global economy is limited.
Russia's military action has a direct impact on the international order dominated by the United States and may have a far-reaching impact
After World War II, the UN Charter and other international treaties established a new international order of respecting sovereignty, territorial integrity and peaceful settlement of disputes. After the cold war, although there are many deficiencies, the United States is regarded as the main leader and supporter of this international order. Russia's use of force and the failure of western countries to stop it not only led to a more serious antagonistic relationship between Russia and Western countries, but also had a great impact on this order. The authority of the United States has declined, and its dominant order may become unstable and chaotic. We believe that many countries may feel more insecure and may lead to risks such as an arms race, nuclear proliferation and the intensification of regional conflicts.
It has a structural impact on the asset market
Short term risk assets fall, but may be repaired quickly; As Russia is a major producer of oil and other bulk commodities, the price of bulk commodities may be supported; Long term good military industry and independent control.
Risk tip: the escalation of the war, the sharp rise in oil prices led to the deterioration of inflation and the intensification of the conflict between Russia and Ukraine
