July 2022

Globalisation

For the last couple of decades, we have heard about Globalisation and a shrinking world. We have also heard how we are finding or reacting to events the same. But are we really?

When COVID hit the world, we not only saw different parts of the world hit at different times. But the reactions of countries were different.

FISCAL stimulus by countries were very different, as was the availability of vaccinations one, two and three. We still see parts of China shut down today.

The effects of the financial assistance will affect countries differently. With increasing interest rates on borrowing, we now see a bigger financial effect than originally imagined or allowed for.

Globalisation has further suffered when you look at the changing democracy in Hong Kong and how the West reacted (or didn’t). Now Russia has captured Crimea and Ukraine.

The world waits to react and to help fight the ongoing illegal war. In fairness some countries are helping, but not all, and not everyone is on the same side.

Ukraine

Ukraine, for many people, until this year, was just the name of a country, its location was not really known and neither, by many, was it’s size and importance in terms of its produce to the world.

At the time of writing, commentators are talking of Russia taking a different approach to occupying Ukraine, and who they will attack next – Moldova being the most likely.

How will other countries then react?

Russia used to be a large area for investment when it was one of the BRIC countries (Brazil, Russia, India, China).

Today we hold no Russian investments in our portfolio, and valuations of their investments have been reduced to zero by companies.

World events at the moment are having a big effect on many company and market valuations, and their recovery will also differ.

Now is not a good time for irregular fund management!