Following the news that Russia has started its invasion of Ukraine, the Investment Team at Courtiers continues to monitor developments and the impact on markets.
Although as you would expect the stock market that has been hardest hit is Russia, where the MOEX (Russia’s index of its largest and most liquid stocks) is off -30% last night’s closing level, the immediate market reaction to the news from Ukraine appears surprisingly modest.
The price reaction in major markets is more modest than many had predicted and at the time of writing the US S&P500 (Emini) future is off around -2.5% and the UK FTSE 100 future is off around -3%.
Gary Reynolds, CIO said that the Investment Team had been preparing for this eventuality for several weeks and for the inevitable sanctions it would bring if it were to occur.
“In anticipation of this happening, over the last few weeks the Investment Team has worked with Courtiers Compliance Team, and looked at guidance from our depository, Citi, to identify our exposure to Russia. One of the benefits of investing through regulated funds, is that they are overseen by first class internal, and external compliance departments, which means that there are three sets of eyes looking out for the investor,” said Gary
Gary said investors should be reassured to know that Courtiers has no direct exposure to Russian assets and that although it does hold one stock, Polymetal, with gold mining interests in Russia, this forms only a very small part of its funds (0.42% of Cautious, 0.57% of Balanced, 0.74% of Growth and 3.07% of UK Equity Income).
Indeed, Courtiers has not held any direct exposure to Russia since it exited an emerging market ETF (Exchange Traded Fund) in 2021, due to its exposure to Russia and China.
“We always monitor ownership of companies and we have had a heightened awareness for potential sanctions on Russian owners since 2018 when the US sanctioned 24 Russians and 14 companies due to “malign activities to subvert Western democracies”, said Jake Reynolds, Head of Asset Management.
Jake said the Investment Team had looked at the holdings in the portfolios in a number of ways to take account of Russian risk this year. This included looking at ownership, footprint, revenue & assets.
The Investment Team will continue to monitor developments and further updates will follow.