Ukraine issue for investors
The market is being blown about by the Ukraine situation.
However, this issue is extremely deep and complex. Even studying a little won’t allow total understanding.
(But basically, Ukraine’s finances are collapsed, and it seems they want financial support from the Western side. In short, it’s about “money.”)
So, if you can’t understand this issue, should you refrain from investing?
No, if you’re not investing in Ukraine, you don’t need to understand every detail of the issue.
That said, it is an important matter. There is one point to be careful about.
Europe is heavily dependent on natural gas from Russia. Moreover, there is no alternative source of supply to replace Russia.
If Russia ties the Ukraine issue to its gas supply to Europe and halts it, Europe’s economy cannot function. Not only that, energy prices would soar, spreading to the entire world. Global inflation would rise further, economic growth would stall, and stock prices would fall.
Is there a possibility that Russia stops supplying natural gas?
That would worsen Russia’s finances (since revenue from gas exports would stop), trigger financial and economic sanctions from the West, and likely render the Russian economy untenable, making it unlikely for Putin’s regime to endure for long.
It would be unusual, but if you say “there is no possibility,” that would be game over (Russia loses).
Desperation drives even a cornered mouse to bite. Russia must not be cornered.
For Russia, “stopping gas supply” is a powerful weapon, so even if it does not intend to do so, it must show that it has that option.
In the end, investors should assume that the Ukraine issue is not risk-free, but will settle in a state of near status quo.
Do not be swayed by information warfare and the fox and badger deception
This time, Ukraine pushed the issue forward. They acted to join the Western side. (Ultimately, the goal is presumably to receive financial support from the West. Ukraine is in a tough spot too.)
Russia cannot tolerate Ukraine becoming a shield against Western attacks, since Ukraine is serving as a buffer for the West.
Seeing Europe’s gas shortage and turmoil, Russia showed a bold stance to threaten Ukraine invasion.
Russia’s objective is to keep Ukraine in place and to prevent NATO’s expansion.
The West (especially the United States) seems eager to expand NATO and to contain Russia, but many European politicians think there is no need to push it if it would overly provoke Russia.
After all, if Ukraine is brought into the Western camp, Europe would have to financially support Ukraine, and Russia would threaten to cut off gas—nothing good would come of it. In that sense, this is a matter between the United States and Russia, who want to curb Russia.
Russia’s gathering of troops on the Ukraine border is not for the purpose of invasion, but to extract favorable terms from the West; the United States understands this. Yet Biden soon said Russia would invade, and in response, Russia says it has no invasion intent. They say there is no invasion intent while bolstering forces (they may not really intend to invade).
The information war is intense. Do not believe news with unclear sources.
There are reports like “a facility exploded,” “gunfire occurred,” “part of the military withdrew,” “invasion in the coming days.” It’s unclear what is true or important. Do not believe it outright.
On February 15, Russia announced a partial withdrawal of troops, which led to a drop in oil prices and a rise in stock prices. (Even so, they are increasing forces.)
However, on February 17, Russia reported that the Ukrainian army fired in the eastern Donbas region (pro-Russia Lugansk). Ukraine denies it. There was concern that Russia might invade Ukraine citing being attacked by Ukrainian forces.
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