Maintain Economy ― Geopolitical speculations are still ahead
News about the withdrawal of Russian troops from Syria caught investors by surprise. Actually, this is Vladimir Putin’s decision came as a surprise to all. And the markets are trying to determine how to correctly interpret this event. About this says Nikolay Korzhenevsky in the program «Replica».
The news of the withdrawal of Russian troops from Syria will affect the behavior of investors. Now the financiers need to understand only one thing: whether or not to play on the easing of geopolitical tensions? Your economic opinion is divided Explorer Nikolai Korzhenevskiy.
Financiers need to understand only one thing: whether or not to play on the easing of geopolitical tensions? Can we expect to improve the prospects of cooperation between Russia and Western countries? The answer, of course, lie in the plane of pure policy, and to provide a professional Outlook it’s hard for me. Will only hypotheses that I hear from relevant experts: now all the attention is returned to Ukraine and the decision of the Kiev question. In addition, significantly lower risks of escalation of Syrian conflict. And it could have complex consequences because of the position of Turkey and Saudi Arabia. These countries, let me remind you, declared its intention to start a ground operation in Syria.
Financial implications of the stories of Syria and Ukraine are different. Markets at the time, last September, had a negative reaction to the news that Russia sends troops to Syria. Immediately raised fears about additional geo-economic isolation, and it pressured and the stock market and the ruble. However, the sale did not last long. Investors quickly realized that from the standpoint of global politics, this course was very beneficial for our country, and to purchase Russian securities.
The geopolitical premium associated with Syria, thus, is insignificant. The fact of the withdrawal of troops from the country is unlikely to lead to an immediate change in the price of Russian assets. This is a more important event for the gold market. The precious metal rose in price quite quickly in recent weeks, and one of the reasons was just geopolitics. Now the middle East award blown away. The trend in gold, of course, it will not break, but the nerves of those who bought the metal, tarnished.
For Russian markets, however, is much more important further progress against Ukraine. Geopolitics (sanctions against Russia), undoubtedly, still puts pressure on our assets. The undervaluation of the ruble associated with these factors is at least 7-8%. That is, if fantasize and assume that Russia today would remove all economic constraints, simultaneously, the dollar could fall in the area is 65 rubles. This is my subjective and very conservative figure, some experts give a far more bold predictions. Anyway, sanctions are definitely a lot of pressure on the cost of our assets. And quantitative estimates differ because of different influence of fallen oil prices.
Game for an early lifting of the sanctions or even just a slight improvement of the geopolitical situation really has not begun. And this is understandable. For example, just today came the news that the European leadership has recommended that banks in the region not to buy Eurobonds of Russia. So Syria Syria, but the other problems remain. Accordingly, the markets are merely removed from the prices unreasonable fear about middle East issues. But the withdrawal of Russian troops from Syria, most likely implies a high probability of a political solution in Ukraine. And speculation on this topic is yet to come.