Flash Alert – What impact from Russia’s invasion of Ukraine?

In Short

The Russian invasion of Ukraine is a historical attack against the European post-war order, with potentially far-reaching rami-fications. The government in Kyiv declared martial law. Markets have reacted violently to the incursion, with equities selling off and energy prices soaring.


  • Russia’s invasion of Ukraine has been a surprise, given the substantial economic costs for Russia. We look at potential scenarios and suspect that a rapid de-escalation is unlikely. President Putin may try to take advantage from a peculiar political environment on both sides of the Atlantic. Social stress emanating from the energy transition and inflation is giving more leverage to Russia, especially on energy-dependent countries like Germany and Italy. Both the US and France face elections this year. 
  • We discuss the potential range of sanctions. Their direct impact on the global economy is manageable; yet the main risk lies in a continued surge of energy prices, potentially precipitating an economic slowdown. All eyes on the consumer’s purchasing power. 
  • The crisis has increased the stagflation risks. Already we had reduced our pro-risk bias in the face of high inflation and upcoming monetary policy tightening. While geopolitical stress often creates buying opportunities, we see no rush to buy the dips. Further reduce the cyclicality of portfolios for now, waiting for more stability in both the geopolitical and energy complexes. Temporarily increase cash, reduce cyclical stocks, and to a lower extent the Value bias – especially financials, while keeping Energy exposure. Stay overweight Credit but more in IG than HY. Sovereign balance sheets look more exposed than private ones.

Download the full publication below

Flash Alert – What impact from Russia’s invasion of Ukraine?

© Generali Investments, all rights reserved. This website is provided by Generali Investments Holding S.p.A. as the holding company of the main asset management companies of the Generali Group having, directly or indirectly, the majority shareholding in the companies listed below (hereinafter jointly, “Generali Investments”). This website may contain information related to the activity of the following companies: Generali Asset Management S.p.A. Società di gestione del risparmio, Infranity, Sycomore Asset Management, Aperture Investors LLC (including Aperture Investors UK Ltd), Plenisfer Investments S.p.A. Società di gestione del risparmio, Lumyna Investments Limited, Sosteneo S.p.A. Società di gestione del risparmio, Generali Real Estate S.p.A. Società di gestione del risparmio, Conning* and among its subsidiaries Global Evolution Asset Management A/S - including Global Evolution USA, LLC and Global Evolution Fund Management Singapore Pte. Ltd - Octagon Credit Investors, LLC, Pearlmark Real Estate, LLC as well as Generali Investments CEE. *Includes Conning, Inc., Conning Asset Management Limited, Conning Asia Pacific Limited, Conning Investment Products, Inc., Goodwin Capital Advisers, Inc. (collectively, “Conning”).