In addition to the war industry, the war in Ukraine can boost many other areas of growth.
The war in Ukraine will affect world markets, but especially in the long run, the crisis may bring benefits to certain commodity producers. EPA / AOP
Russia’s invasion of Ukraine has destabilized the world economy, but the crisis is also benefiting its shares.
The economist is evaluating the matter for Iltalehti Hannu Nummiaro Local tapola and equity portfolio manager Johan Hamström On the financial management of savings banks.
According to experts, the industries that could benefit from the war are, in particular, the arms industry, various machine shops and commodity producers in terms of energy and metal.
Even if the war does not last long, its effects may be felt in the market for a long time.
– The conflict has highlighted the need to invest in defense capabilities, security of supply and energy self-sufficiency. This will require significant investment in the coming years, Hamström says.
For example, if Europe moves towards energy self-sufficiency and increases its defense spending, energy companies and war stocks could be a profitable investment at the moment.
– Someone makes those missiles and tanks, Nummiaro says.
South America has benefited
Hamström points out that the effects of investments may not be immediately reflected in growth and stock price developments.
– It’s a long process.
In some parts of the world, the benefits are already visible. Since the Russian invasion of Ukraine in the week, world markets have been sawing downwards, but in recent weeks the trend has been up again, says Nummiaro.
– The global stock index is three percent positive, Nummiaro describes the situation.
Colombia, Peru and Brazil, for example, have even received exceptionally high returns.
– Colombia is a big exporter of raw materials.
Will the war bring new products to market?
The coronavirus pandemic made remote access services and disinfection products, among other things, very popular.
Nummiaro does not see the possibility of quite similar surprises in the war in Ukraine, but throws a potential growth example in the field of cyber security.
– Will we start to protect oneself against telecommunication interference even in households, and how would this happen in practice, Nummiaro ponders.
Unprecedented economic sanctions
How long and how much the war will affect, it is impossible to estimate, experts say.
– Pandemic and war are revelatory scourges. But the corona has also been recovered surprisingly quickly, Nummiaro says.
– In the short term, the conflict has caused significant disruption to important supply chains, raising prices and slowing growth. The scale depends a lot on how long the acute phase and the resulting disturbances last, and what mitigation measures are promised, Hamström says.
Crises such as wars or pandemics always cause economic fluctuations, but it is difficult to find a situation comparable to the war in Ukraine.
The economic sanctions imposed on Russia alone are unprecedented, Nummiaro emphasizes.
– The Yom Kippur War could serve as a kind of benchmark. At that time, oil-producing countries embargoed the United States and other pro-Israel countries. This sharply pushed up energy prices, accelerated inflation and weakened growth, Hamström says.
– Commodity producers were the winners in this situation.
Although the uncertainty in the stock market is high, Nummiaro believes that investors are not worth it now.
– In crises, the general advice is that it is not worth changing the investment plan because of the market. That’s true in both the corona pandemic and the war, Nummiaro says.
– It is difficult to predict the future, and therefore not all eggs should be put in the same basket, Hamström concludes.