Given the recent events impacting the financial markets, we thought we would take this opportunity to provide you with a market update; including our insights on the market reaction - specifically due to the recent escalation of the conflict in Ukraine.
Unfortunately, it looks like a well-timed gamble by Putin, taking advantage of a strong domestic balance sheet (materials revenues) and weaker US / European economies.
The market’s initial reaction was to sell (i.e. raise cash), while overnight this changed to buy yield sensitive names (i.e. buy tech and sell banks). Depending on the length of time the conflict continues, interest rates may not rise as quickly as markets have calculated and reserve banks have intimated, over the next 12 months. In other words it will be more of a wait and see approach to what financial impacts the conflict will cause over the coming months.
The reality is that market volatility is set to continue for some time, but for now the impact of recent events appears to be focused on Ukraine and Russia. Interestingly, at the time of writing sanctions appear to be people (oligarch, Russian politicians) focused and mainly financial in nature, with the elephant in the room: how do you heat Europe without Russian gas?
In terms of our portfolios, we have taken opportunities to sell lower conviction, lower liquidity holdings and move these proceeds into high quality, high liquidity names - where valuations have become attractive and hold to more cash.
As always, we will continue our usual approach of managing our funds, being both risk aware and actively looking for opportunities. We will keep you informed of any material impacts to our portfolios. If you have any further questions, please reach out to us at firstname.lastname@example.org or on 0800 646 833.
Disclaimer: Rebecca Thomas is the Chief Executive Officer at Mint Asset Management Limited. The above article is intended to provide information and does not purport to give investment advice.
Mint Asset Management is the issuer of the Mint Asset Management Funds. Download a copy of the product disclosure statement here.
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