Hugo Investing

The war in Ukraine from a traders’ perspective

In recent months the news has been dominated by the war in Ukraine. The images make everyone feel powerless. Fortunately, you see a lot of support and especially people who put their money where their mouth is and immediately pick up refugees or bring things.

As always, developments on the world stage have a direct impact on the stock markets. Economically speaking, a strange phenomenon is taking place; two crises in quick succession: the Corona crisis and now the Ukraine crisis.

If you are an investor, you know that the losses from the beginning of March 2020, the Corona crisis, had already been largely made up for.

Now the world has another big problem to deal with and I would like to take the opportunity here to address a few issues that affect you as an investor and encourage you to think about them further.

Inflation

The newspapers are full of this every day. Inflation is expected to remain high for some time to come. Many investors are looking for investments which can keep up with inflation, which is no easy task. There are almost no individual stocks that can do this, only baskets of different stocks.  Below are two ETFs that aim to track inflation. They are more complex products that you should understand well before you decide to invest in them.

– Lyxor US$ 10Y Inflation Expectations

– IShares USD Floating Rate Bond

Energy

One of the main underlying drivers of rising inflation is energy prices such as oil and gas. Within that sector, finding individual stocks that rise with these rising prices is somewhat easier. Below are two ETFs (baskets of different shares) that invest in this sector:
– Invesco Energy S&P US Select Sector UCITS ETF
As a sub-sector, there are also ETFs that invest in green energy, such as the:
– iShares Global Clean Energy ETF

Defence stocks

In recent weeks, I have often seen reports of investors seeking companies that produce weapons. This sector is no longer called the ‘arms industry’ but ‘defence equipment’. Just as there are no ministers of war, but only ministers of defence. Obviously an important question here is to whom these weapons are supplied, but I myself have made the choice not to invest in them.

Conclusion

The terrible war in Ukraine is in full swing at the moment of writing. The effects are also visible on the stock markets. For yourself, you must assess which of your existing investments are well able to withstand future uncertainties. I have indicated a few examples of sectors which are currently in a rising trend and which you may decide to take advantage of, if you think these trends will continue. I also think I have made it clear that you should let your personal motives play a part in this, or rather form the basis of your investment choices.

Kaspar Huijsman
Kaspar Huijsman is the director of Hugo Investing.  A seasoned expert in investments. 

The information in this article should not be interpreted as individual investment advice. Although Hugo compiles and maintains these pages from reliable sources, Hugo cannot guarantee that the information is accurate, complete and up-to-date. Any information used from this article without prior verification or advice, is at your own risk. We advise that you only invest in products that fit your knowledge and experience and do not invest in financial instruments where you do not understand the risks.

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