Market commentary: Market commentary: Uncertainties lead to short-term price drops/b>
February 21 | Market commentary
In this market commentary you will learn,
- why our companies are fighting the rising inflation are prepared,
- The extent to which the end of the pandemic is responsible for a distorted perception of the company’s results. provides,
- what impact an escalation of the Russia-Ukraine conflict would have on our portfolios, and
- what our further course of action looks like.
Supply bottlenecks, inflation & interest rate environment
Strong comparative quarters & redistribution of consumption
Geopolitical conflict between NATO and Russia
With the geopolitical conflict between Ukraine and Russia coming to a head, an additional issue is coming to the fore and increasing the uncertainties on the capital market.
Should the conflict escalate further, sanctions against Russia by NATO members and allies are to be expected. In addition to steps against individual oligarchs, export controls of US-based technology as well as Cuts for the Russian financial market mentioned as possible sanctions. However, none of our internationally active companies is overly dependent on the Russian market. The effects of possible sanctions thus arise primarily in the form of increased energy prices by the potential loss of Russian exports to Europe, which continues to be particularly dependent on Russian natural gas. Increased energy prices are already having an impact on manufacturing companies in the quarter just ended. However, as mentioned in the previous chapter, changes in energy costs can be passed on to customers with a slight delay. Moreover, the extent of sanctions remains questionable due to the strong dependence of various NATO members on the Russian energy market.
In the event of a worsening of the conflict with the introduction of sanctions, stronger effects on the Russian financial market in the form of Currency devaluation and Valuation declines due to escape of western investors not to be excluded. However, geopolitical and macroeconomic risks were already priced into valuations of Russian companies before the outbreak of the conflict and we also take the risk into account in our analysis and valuation process.
Further strategy & outlook
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Macroeconomic and geopolitical issues are resulting in uncertainties and leading to higher volatility on the capital markets.
In the last two years (since April 2020), the stock markets have almost exclusively risen. There have been no notable setbacks, and the U.S. market in particular.