It is with dismay and concern that we are writing about the invasion of a sovereign European nation. The invasion of Ukraine by Russian troops has come as a shock to the international community. In fact, it came as a surprise to most market participants, as it did to us, that such a warlike attack in the middle of Europe so suddenly became a reality.
Above all, this is a clash of two worlds. It is also an attack on the European value system, with the aim of gaining geopolitical influence on the Eurasian continent. Ukraine - on its way to becoming a more Western-oriented society - was attacked on a pretext.
The information campaign on both sides is taking on dimensions not experienced for decades. As outsiders, the developments on the ground are scarcely comprehensible, let alone verifiable. The coverage is polarising the situation further and is not helping to ease tensions. On the contrary, it is remarkable that the West, with the mobilisation of global public opinion and business, is united in the highest degree of partnership and unity against these warlike actions.
It is the first time in decades that the Western world has united in condemning Russia's actions so strongly and imposing strict sanctions to hit the Russian economy hard in the short term and build up pressure from within. Europe's long underestimated security requirements have also been rediscovered.
While at the beginning of the year capital markets were still worried about issues such as the maximum number of interest rate hikes in 2022, and the pandemic was only slowly receding into the background, the focus of market participants shifted abruptly with the outbreak of the war.
Financially, we are seeing a further intensification of supply chain issues and crazy, unpredictable price developments in global commodity markets, leading to rising energy prices and significant losses on risk assets. Inflation concerns are taking over as the increase in oil and gas prices, which did not just start as the conflict escalated, is only fuelling inflation. The additional risks to global economic growth present monetary policymakers worldwide with the dilemma of a stagflationary environment. While Russia and Ukraine's direct share of global GDP is less than 3 percent, and Russia has already been increasingly isolated since the annexation of Crimea in 2014, the indirect consequences cannot yet be accurately assessed
In the context of highly volatile markets, it is difficult to separate the short- to medium-term assessment of the market from the real economic impact on the development of corporate profits in the medium to long term. The stock market is a discounting mechanism, which currently is not producing good results due to the new, unknown uncertainty factors.
Over the last two months, the market experienced tremendous sector rotations, due to the new realities of a post Covid-19 world, the expected interest rate rises, and now due to the geopolitical escalation. The partly undifferentiated sell-offs in these macro-driven markets resulted in massive distortions and discrepancies in share price developments. Single stock selection is challenging for an active fund manager in such a highly simplistic environment. However, it is precisely in such moments that opportunities also arise, although they often only appear obvious in hindsight. Here it is important to remember the long-term return potential of the stock market.
We see the willingness of the West to oppose these recessionary developments vehemently, as in our view the preservation of the Western value system is also at stake here. In this way, the European states are prepared to make the greatest possible efforts to this end. The democratic nations are taking this very seriously.
Once the situation improves, the potential for the equity markets at these levels is also significant. We see extraordinarily low valuations in many stocks. In general, a certain degree of rationality is a minimum requirement for prudently weathering adverse phases such as this one. This was demonstrated most recently in the spring of 2020, when Covid-19 caught the entire world virtually unprepared. The experience of how our portfolio companies dealt with the pandemic - with agility and flexibility - gives us confidence that current and future challenges can also be mastered. The recent results of numerous companies have demonstrated impressively that they present very solid results even in difficult conditions.
This is a marketing communication addressed exclusively to professional and/or eligible counterparties in accordance with the MiFID II Directive (2014/65/EU).
This marketing communication is for information purposes only and provides the addressee with guidance on our products, concepts and ideas. This does not form the basis for any purchase, sale, hedging, transfer or mortgaging of assets. None of the information contained herein constitutes an offer to buy or sell any financial instrument nor is it based on a consideration of the personal circumstances of the addressee. It is also not the result of an objective or independent analysis. MainFirst makes no express or implied warranty or representation as to the accuracy, completeness, suitability, or marketability of any information provided to the addressee in webinars, podcasts or newsletters. The addressee acknowledges that our products and concepts may be intended for different categories of investors. The criteria are based exclusively on the currently valid sales prospectus. This marketing communication is not intended for a specific group of addressees. Each addressee must therefore inform themselves individually and under their own responsibility about the relevant provisions of the currently valid sales documents, on the basis of which the purchase of shares is exclusively based. Neither the content provided nor our marketing communications constitute binding promises or guarantees of future results. No advisory relationship is established either by reading or listening to the content. All contents are for information purposes only and cannot replace professional and individual investment advice. The addressee has requested the newsletter, has registered for a webinar or podcast, or uses other digital marketing media on their own initiative and at their own risk. The addressee and participant accept that digital marketing formats are technically produced and made available to the participant by an external information provider that has no relationship with MainFirst. Access to and participation in digital marketing formats takes place via internet-based infrastructures. MainFirst accepts no liability for any interruptions, cancellations, disruptions, suspensions, non-fulfilment, or delays related to the provision of the digital marketing formats. The participant acknowledges and accepts that when participating in digital marketing formats, personal data can be viewed, recorded, and transmitted by the information provider. MainFirst is not liable for any breaches of data protection obligations by the information provider. Digital marketing formats may only be accessed and visited in countries in which their distribution and access is permitted by law.
For detailed information on the opportunities and risks associated with our products, please refer to the current sales prospectus. The statutory sales documents (sales prospectus, key investor information documents (KIIDs), semi-annual and annual reports), which provide detailed information on the purchase of units and the associated risks, form the sole authoritative and binding basis for the purchase of units. The aforementioned sales documents in German (as well as in unofficial translations in other languages) can be found at www.mainfirst.com and are available free of charge from the investment company MainFirst Affiliated Fund Managers S.A. and the custodian bank, as well as from the respective national paying or information agents and from the representative in Switzerland. These are:
Austria: Raiffeisen Bank International, Am Stadtpark 9, A-1030 Wien, Österreich; Belgium: ABN AMRO, Kortijksesteenweg 302, 9000 Gent, Belgium; Finland: Skandinaviska Enskilda Banken P.O. Box 630, FI-00101 Helsinki, Finland; France: Société Générale Securities Services, Société anonyme, 29 boulevard Haussmann, 75009 Paris, France; Germany: MainFirst Affiliated Fund Managers (Deutschland) GmbH, Kennedyallee 76, D-60596 Frankfurt am Main, Deutschland; Italy: Allfunds Bank Milan, Via Bocchetto, 6, 20123 Milano MI, Italy; Lichtenstein: Bendura Bank AG, Schaaner Strasse 27, 9487 Gamprin-Bendern, Lichtenstein; Luxembourg: DZ PRIVATBANK S.A., 4, rue Thomas Edison | L-1445 Strassen; Portugal: BEST - Banco Eletronico de Servico Toal S.A., Praca Marques de Pombal, 3A,3,Lisbon; Spain: Societe Generale Sucursal en Espana, Calle Cardenal Marcelo Spinola 8. 4t planta. 28016 Madrid, Spain; Sweden: MFEX Mutual Funds Exchange AB, Grev Turegatan 19, Box 5378, SE-102 49, Stockholm, Sweden; Switzerland: UBS Fund Management AG, Aeschenplatz 6, 4052 Basel, Switzerland; UK: Société Générale Securities Services, Société Anonyme (UK Branch), 5 Devonshire Square, Cutlers Gardens, London EC2M 4TL, United Kingdom
The investment company may terminate existing distribution agreements with third parties or withdraw distribution licences for strategic or statutory reasons, subject to compliance with any deadlines. Investors can obtain information about their rights from the website www.mainfirst.com and from the sales prospectus. The information is available in both German and English, as well as in other languages in individual cases. Explicit reference is made to the detailed risk descriptions in the sales prospectus.
This publication is subject to copyright, trademark and intellectual property rights. Any reproduction, distribution, provision for downloading or online accessibility, inclusion in other websites, or publication in whole or in part, in modified or unmodified form, is only permitted with the prior written consent of MainFirst.
Copyright © 2022 MainFirst Group (consisting of companies belonging to MainFirst Holding AG, herin „MainFirst“). All rights reserved.