This new world order will make risk management and investments in accordance with strong systemic processes all the more important.
On February 26, Russia entered its third day of military operations against Ukraine. On the night of the 25th, the Russian armed forces launched a strike on Ukraine's military infrastructure using air- and sea-based cruise missiles. The Russian army is advancing deep into Ukraine and advancing to Kiev and other important towns, while the Ukrainian military and civilians are also stubbornly resisting and engaging in street battles with the Russian army in many places. The Resistance of the Ukrainian army was greater than Russia expected. But the Biden administration still warned that Kiev could soon fall.
At the same time, Europe and the United States escalated sanctions against Russia, and anti-war demonstrations broke out in many parts of the world, including Russia.
As the crisis situation is unclear, global markets are looking for direction in the shock of heavy falls and sharp rises. The U.S. stock S&P 500, Dow Jones and Nasdaq fell 5.6 percent, 4.9 percent and 7 percent, respectively, before rebounding in Thursday's session, only to reverse after Biden's national address. As of Friday's close, the S&P 500 and NASDAQ recorded weekly gains of 0.8% and 1.1%, respectively, while the Dow was flat.
Brian P. Klein, a former U.S. diplomat and trade officer, a geopolitical and economic strategist, said in a new article in Barron's: "It is too early to assert that the risk of war in Europe has been fully absorbed." As Russia's air, land and sea power is gradually fully activated, the fears and impact effects seen by global investors are still in their early stages. ”
1. How far does Putin want to go? Risk management becomes even more important
When Russian President Vladimir Putin announced a special military operation on February 24 to "protect the Donetsk and Luhansk Republics," he said his goal was to "demilitarize and de-Nazify" Ukraine. Experts believe that "demilitarization" can be understood as making the opponent lose military capabilities and cannot pose a threat, so Russia will completely destroy the heavy weapons and equipment of the Ukrainian army in this military operation, including fighters, tank armored units and various defense forces, such as anti-aircraft missile units, the navy and so on.
Russia has also previously asked the United States and NATO to provide comprehensive security assurances, including a pledge that Ukraine will never join NATO. NATO Secretary-General Jens Stoltenberg told the NATO-Ukraine Commission meeting in Brussels this week that Putin's military adventurism was "the most dangerous moment in European security in a generation."
According to Brian P. Klein, Putin's ambitions do not stop at Ukraine, but pursue a larger geopolitical framework that questions the western-dominated borders and definitions of State borders after World War II, covering Moldova in southern Ukraine and Finland in the north, as well as Georgia, Armenia and Azerbaijan, to the border with its ally Iran, all of which were once under broader Russian control.
Klein said: "This means that in the near future, more market turmoil, not less, has not yet been digested." ”
Paula J. Dobriansky, a senior fellow at Harvard University and former U.S. Undersecretary of State for Global Affairs, wrote in Barron's: "European countries bordering Ukraine and Russia, such as Poland and the three Baltic states, are deeply concerned about Russia's attack on Ukraine and its impact on their own security. ”
However, putin said in a Feb. 22 meeting with Azerbaijani President Aliyev: "We expect speculation that Russia intends to restore the empire within its borders." He added: "This is absolutely not true. ”
Credit Suisse Global Chief Investment Officer Michael Strobeck told barron's Chinese that Russia's military action against Ukraine has exacerbated geopolitical risks and financial market turmoil, making investors uneasy. "These developments mark a clear shift towards a new world order. This new world order will make risk management and investments in accordance with strong systemic processes all the more important. ”
2, Europe and the United States do not move, the most end of the war may be the economy
Contrary to Brian P. Klein, Samuel Greene, a professor of Russian political science and director of the Institute of Russian Studies at King's College London, argued in an interview with Barron's that Putin "will not go all the way." Because if putin's cost-benefit analysis is widely viewed from the perspective of Russia, he has benefited a lot from the political level in this confrontation, but there are still dynamic risks in the domestic public opinion environment and the interests of the elite. War itself is also risky, because war is unpredictable. "His decision to accept these risks does not mean that the risks do not exist."
At some point, he argues, these risks will start to really become a reality, having an impact on the economy, and Putin will have to start navigating them and making some decisions about how to manage the economy. "Russia is likely to move towards a period of greater self-sufficiency, so the economy will be much smaller in size."
The economic impact is not limited to Russia. Barron's believes that it is certain that if the war in Ukraine continues to drag on, western countries may still impose oil sanctions on Russia in the future. But that would mean less oil supply, higher oil prices, inflation, and a drag on economic growth.
Earlier, US President Biden and NATO Secretary-General Jens Stoltenberg both said they had no intention of sending troops to Ukraine.
Dobriansky said the Russian-Ukrainian crisis is also testing the determination and unity of the West, especially the United States. "Are we just talking better than doing it?" Or will Washington and other Western countries take tough measures to punish Russia? How we handle this aggression will affect how other governments around the world view the United States and our commitment to them. Our credibility, leadership and position are at stake. In the aftermath of the war in Afghanistan, our ability to guarantee peace and stability in Europe is facing an even more severe test. ”
3. What is SWIFT? Why are financial sanctions considered "nuclear weapons"?
With the announcement of new financial and technical sanctions by the United States and its allies, market analysis generally believes that the ruble and Russian stock markets may continue to face considerable downward pressure, but around whether to ban Russia's use of the International Settlement System of the Association for Financial Telecommunications of Global Interbanks (SWIFT), Biden has not given a positive statement so far, and some market analysts have concluded that "the sanctions action does not involve the core and has no impact on Russia." ”
CNN Business and other relevant industry media pointed out that SWIFT sanctions can be regarded as financial "nuclear weapons", isolating Russia from the global banking system and foreign exchange transactions, thus causing a sudden shock to Russian companies and their foreign customers, especially oil and gas buyers denominated in US dollars; former Russian Finance Minister Alexei Kudrin estimated in 2014 that excluding Russia from SWIFT would cause its economy to shrink by 5%.
Founded in 1973, SWIFT is now used by more than 11,000 financial institutions to send security messages and payment instructions. Since there is no globally recognized alternative, it is seen as an important conduit for global finance.
Now, the smoke of the debate over this sanctions has begun to fill, and Russia's counter-warning is the cut off of oil and gas supply. According to TASS, Deputy Speaker of the Russian House of Lords Zhulariv said on the 22nd: "If Russia disconnects from SWIFT, then we will not receive foreign currencies, but buyers, first of all, European countries, will not receive our commodities - oil, gas, metals and other important components." ”
In addition, Caijing magazine has analyzed that Russia's active military attack actually has the effect of increasing revenue by pulling geopolitical tensions. Recently, the international crude oil, natural gas and wheat and other commodities and strategic resources transactions that Russia relies on to earn foreign exchange have shown an upward trend in prices, which will make up for the losses caused by Western sanctions against Russia to a certain extent. Some institutional analysts even believe that "this is not short-term, Putin will continue to push up prices by creating tension." If international crude oil can guarantee $100 per barrel this year, Russia will receive $60 billion to $80 billion in additional revenue this year. ”
4, the unipolar era has come to an end, and the future is more complex than the bipolar world
Brian P. Klein believes that U.S. stocks have endured enough headwinds this year, including rising inflation, continued disruptions in supply chains and Fed rate hikes. Overseas wars, especially those that do not directly involve the U.S. military, were not the most likely factors to cause stock market shocks. But the Russian-Ukrainian war has also sounded a reminder and wake-up call to the great powers in other parts of the world.
He further noted that Russia is using actions to weaken U.S. power and influence around the world and implicitly and unequivocally threaten to use massive nuclear weapons against any resistance, events that will continue to profoundly shape the international system and U.S. foreign and security policy for years to come.
Affected by the atmosphere of the situation in Russia and Ukraine, TSMC shares (US.TSM) continued to fall more than 3.5% since Thursday, closing at $111.88; Taiwan's United Microelectronics (US. UMC) fell 1.8 percent to close at $9.24, compared to a collective 3.5 percent increase in the PHLX Semiconductor Index, which is under pressure. Wedbush analyst Matthew Bryson told Barron's by email that chip stocks may have reacted to the situation in Ukraine, and that the move by TSMC and UMC reflects a global investor's extended risk prediction of the situation in Taiwan.
Marc Chandler, a commentator at Barron's, concludes that the world is watching and waiting. America's unipolar era is long over, and the future looks more complex than the bipolar world in which China and the United States compete.
Text | The Chinese edition of Barron's magazine was written by Sun Yixi and Kang Juan
Edit | Kang Juan
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