text/Xhabin
Whether it is the stock market or the foreign exchange market, the spillover effect of the conflict between Russia and Ukraine has spread to the financial market again.
Russian President Putin announced in a video speech just released on the 21st that part of the mobilization will be carried out from today. This is the first time Russia has mobilized after World War II . According to the law previously issued by Russia, citizens currently in the reserve service, who have served in the armed forces and have certain military professions and related experience, will be summoned to serve in the military.
Russian Presidential Press Secretary Peskov also recently declared that under the current circumstances, the Russian-Ukrainian conflict cannot be resolved through negotiations.
What other impact will this conflict have in the future?
stock market plummeted, and there were new moves in the foreign exchange market
On September 20, the three major European stock markets fell across the board. As of the close, the UK stock market fell 0.61%, the French stock market fell 1.35%, and the German stock market fell 1.03%.
It was also on this day that the Russian stock market suffered a sharp drop in by . Its MOEX index once fell by more than 10%, the largest drop since February 24, and the Russian RTS index also fell by more than 10%. But the MOEX index's decline narrowed to 8.84% in the late trading, regaining some lost ground.
There were many news related to the conflict between Russia and Ukraine that day, which affected the sentiment of Russian stock investors to a certain extent.
For example, the referendum on the entry of Luhansk and Donetsk into Russia will be held on September 23 and 27. At the same time, the referendum of to join the Russian Federation in the region may be held in the near future. According to TASS html on the 620th, Dmitry Medvedev, vice chairman of the Security Conference of the Russian Federation, said that it is necessary to hold a referendum to join Russia in Donetsk and Lugansk.
In addition, just as the Russian State Duma passed the second and third readings of the bill were debated in Russia. The move of Russia and Duma is considered to be a step that will significantly escalate the conflict between Ukraine by . In addition to the stock market of
, Moscow Exchange also issued an announcement on the evening of the 20th stating that starting from October 3, 2022, the foreign exchange market of the Moscow Exchange will suspend trading of pounds. The suspended trades include spot and forward on-market and off-market trading for pound- rubles and pound-dollars.
The Moscow Exchange said that the reason for the suspension of business was the potential risks and difficulties in settlement of the pound. Previous transactions and transactions to be delivered by September 30, 2022 (including that day) will be executed in the normal mode.
Moscow Exchange stated that it is working with banks to restore relevant transactions and the recovery time will be announced separately.
Previously, Putin said at the Eastern Economic Forum plenary session that the United States never restricts itself in order to pursue its own interests, and will not be embarrassed about anything in order to achieve its goals. The United States has destroyed the foundation of the world economic order, the US dollar and the British pound have lost credibility, and Russia is giving up using them.
In fact, the exchange rate of ruble has strengthened after a sharp drop in the early stages of the conflict between Russia and Ukraine, and is currently stable at the level of 60 rubles to 1 US dollar.
Chief economist Peng Wensheng pointed out that the fundamental reason for the ruble to appreciate against the market is that Russia's status as an important energy producer and exporter in the context of the increase in the importance of physical assets. Recent experience in Russia shows that in the context of de-globalization and de-financialization, the importance of physical assets has increased, and the supporting role of commodity on a country's currency will increase.
How will global food prices go in the future?
Chief economist and director of the Institute of Zhixin Investment Lianping said that the Russian-Ukrainian conflict has worsened the shortage of food supply and soared food prices in both production and trade. This has led to residents in some parts of the world, mainly those in developing countries, on the verge of famine, impacting local social stability and affecting their economic recovery.
Putin previously said at the 7th Oriental Economic Forum that restrictions on Russia's export of agricultural products and fertilizers have been eased, but the problem has not been completely resolved, which has led to continuous rise in grain prices. The international community should gather strength to block the momentum of rising food prices.
Chief analyst Chen Xing pointed out that since the outbreak of the Russian-Ukraine conflict, the global food supply chain has been seriously affected, and international food prices have been rising steadily. Subsequently, international grain prices fell under the influence of positive production expectations and turning around Ukrainian grain exports.
But Chen Xing also emphasized that the European natural gas crisis continues to ferment, and the shortage of fertilizer supply in Europe may affect the sowing and growth of autumn crops. At the same time, the Russian-Ukrainian conflict is still restricting food production and India's additional tariffs on exports of rice have once again threatened food supply. Taking into account the multiple factors such as high fertilizer prices, the Russian-Ukrainian conflict and India's export tariffs, it is expected that international food prices may continue to rise.
Chen Xing specifically mentioned that after the outbreak of the Russian-Ukrainian conflict, Ukraine's grain exports fell by more than 50% compared with last year. Russian wheat exports were also severely damaged, with Russian wheat exports falling by about a quarter in the first two months of the new agricultural year. Although the restart of the Black Sea Port has eased food pressure, the conflict between Russia and Ukraine may be difficult to reconcile in the short term, and food prices remain under pressure to rise.
Russia-Ukraine conflict, Europe is injured?
In the early stages of the Russian-Ukrainian conflict, many institutions predicted that Russia's economic performance will grow by 10% this year. But at present, Russia is more "solid" than they think.
official data shows that Russia's GDP fell by 0.4% in the first half of 2022. It is worth noting that the development trends of various industries in Russia are different. Although energy production, including oil and natural gas , has shrunk, its selling price has risen, and the current account surplus hits a new high. The surplus in the second quarter reached US$70.1 billion, the highest level since 1994.
Even U.S. officials admit that the current sanctions against Russia are indeed not ideal. On September 16, local time, CNN reported that several senior U.S. officials revealed that they were disappointed that the US-led sanctions on Russia failed to have a significant impact on the Russian economy. Now they predict that the worst economic impact will not occur at least early next year.
In July, International Monetary Fund (IMF) raised its GDP forecast for Russia this year by 2.5 percentage points, and the economy is expected to shrink by 6%. The IMF pointed out that despite the West's sanctions, Russia seems to have curbed the impact of sanctions and domestic demand has shown some flexibility.
Greek broadcasting and television company (EPT) quoted Greek former Prime Minister Alexis Tsipras as saying that in the Russian-Ukrainian conflict, Europe is the biggest loser in geopolitical aspects, while the United States has not lost anything.
Chief economist of China Securities Li Xunlei pointed out that under the Russian-Ukrainian conflict, Russia significantly reduced the transmission of natural gas to Europe on the grounds of various "failures". At the end of July, after obtaining the turbine provided by Canada, Russia still reduced the daily gas supply of natural gas delivered to EU to about 20% of the original. With the arrival of the peak of natural gas use in Europe in winter, this short-term severe energy supply and demand gap will put great pressure on the European economy and even social production.
Assistant researcher at the Institute of Carbon Neutral Development of Shanghai Jiaotong University, Yuting mentioned that around the proposal to set an upper limit on Russian natural gas prices to force Russia to make compromises to the European market, Serbian President Vucic warned on September 16 that if the EU continues to insist on setting an upper limit on Russian natural gas prices, Russia may decide to completely close its natural gas supply to Europe.
Yuting pointed out that in order to discuss how to take special measures to curb the soaring energy costs and alleviate the energy supply crisis, the energy ministers of EU member states held an emergency meeting on the 9th of this month, focusing on the measures to deal with the energy crisis, including imposing huge profit tax on energy companies, limiting the pricing of marginal cost of electricity and setting a Russian natural gas price ceiling. However, judging from the negotiation results announced after the meeting, the previously highly concerned issue of Russian gas price limit was not reached due to large differences between the members.
Youting said that for the EU, temporarily shelving the controversy and join forces to keep warm is a powerful measure to survive the severe cold, but in the face of real pressure and tough stance on Russia, this winter may be the "coldest" and "most expensive" winter for EU countries in recent years.
From: Guoshi Express
Editor: Chen Haoxing
Editor: Wei Xi
Editor: Wei Xi
