London has long been seen as a hub for wealthy Russians; with high end shopping, gastronomic excellence and one of the most stable and lucrative luxury property markets in the world, it is the second home of choice for many oligarchs and Russia’s elite.
Headline news surrounding Russia’s invasion of Ukraine over the past week has captured the attention of the world. The long term ramifications of such action will inevitably become clear, but where this is heading remains to be seen. As news surfaces of ceasefire talks, HULT Private Capital looks into the sanctions being imposed on Russia by the UK and the western world, and how the markets are responding globally.
HULT Review of The Current Political Response
The BBC reported a declaration made by Prime Minister Boris Johnson last Sunday, where he clearly stated, “We are making sure that we open up the Russian doll of property ownership, of company ownership, in London and see who’s behind everything.”
In a report posted on February 24 on gov.uk, the extent of the UK’s sanctions were laid out:
– The UK will impose “punishing sanctions” targeting President Putin’s inner circle and the wider Russian economy. Named targets included Kirill Shamalov, Putin’s former son-in-law.
– Russian companies banned from raising capital on the UK’s markets.
– Russian nationals limited to £50,000 maximum in UK savings accounts.
– Russian companies and financial institutions amongst those banned from borrowing capital from UK lenders.
– Manchester United’s former sponsor, Russian airline Aeroflot, banned from British airspace.
– Restricted trade measures to increase export controls with the move set to affect industries such as electronics, aerospace and telecommunications.
SWIFT Sanction Imposed
In a united effort from western countries, it was confirmed that selected Russian banks will no longer have access to The Society for Worldwide Interbank Financial Telecommunication (SWIFT). In a desperate bid to protect themselves against cash shortages, the move has reportedly resulted in a surge of Russians queuing at ATMs across the country.
“Our industry is under the microscope where Russian investment is concerned,” says HULT’s Investment Expert
As global investment managers, HULT Private Capital agreed the moves to ensure funds under management are done so lawfully. Senior Manager John Hudson said, “The situation is unfolding very quickly and whilst the approach from the UK and US remain economic, our industry is under the microscope where Russian investment is concerned. It is absolutely imperative to the integrity of any investment firm that all clients should be verified, and the source of funds authenticated. We, as an industry, cannot facilitate such heinous acts which will inevitably have tragic consequences on a major scale.”
HULT Private Capital Evaluate Cost To Markets
The invasion is causing ripples through asset classes across the globe. Stocks are tumbling, traditional safe havens like treasury debt and gold are on the rise and key commodities such as oil are spiking. With the UK seeing inflation hit 30-year highs, and the US witnessing levels unseen in four decades, the unrest in the commodities market is a cause for concern. Global benchmark Brent crude oil futures topped $100 a barrel for the first time since 2014, indicating consumers can expect higher prices at the pump.
The unrest unfolding in Ukraine is Europe’s largest military conflict since World War II, but strategists maintain the best course of action for most retail investors is to keep calm and avoid panicking. Hudson agreed that, “Investor response triggered by fear seldom lends itself to the execution of a strategy with the results intended. We have seen this historically and those who weather the storm are rewarded with renewed stability.”
As it stands, no one knows what Russia’s invasion of Ukraine ultimately means for energy prices or political relations, but we must not lose sight of the most important consideration: the civilian impact on those innocent and afraid on both sides of the border.
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