A survey of 726 UK-based investors has revealed that the majority are unshaken to date by the conflict between Russia and Ukraine but hold strong views on the future market implications of the crisis. It found:
- Just 14% of investors monitor the situation with Russia and Ukraine when thinking about their investment strategy
- Even fewer (10%) have changed their strategy since the conflict broke out
- However, 67% believe consumers and investors will boycott companies who continue to do business with Russia
- This figure rises to 87% amongst those with portfolios in excess of £250,000
- The majority (69%) believe the crisis will result in permanent changes to international trade between Russia and the West
- Half, or 50%, expressed concerns that the crisis will set ‘net-zero’ goals back
New research conducted on behalf of HYCM found that UK retail investors have remained composed in the face of the Russia-Ukraine conflict, despite significant concerns about future implications of the crisis on the financial markets, international relations, and the environment.
The trading broker commissioned an independent survey of 726 UK-based investors, all of whom have investments in excess of £10,000, excluding the value of their residential property, savings, and workplace pensions.
It found that only 14% of investors monitor the conflict between Russia and Ukraine when thinking about their investment strategy. The same number (14%) said they were concerned about the risk of a wider conflict and were investing more carefully as a result, while even fewer (10%) have made changes to their portfolio in light of the intervention.
Despite this inaction, HYCM’s research showed that the majority are taking a moral stance on the conflict, as 67% of investors believe consumers and investors will boycott companies who continue to do business with Russia. This figure rises to a sweeping majority (87%) amongst those with portfolios in excess of £250,000.
To guard against inflation, 37% pledged to increase their investment in ‘safe haven’ assets, while 25% stated that they will increase their investment in defence stocks and cyber security should the war develop into a protracted conflict. Elsewhere, 44% said they will reconsider their investments that have exposure to Russia or companies that support its actions.
Looking to the future, the majority (69%) believe the conflict will bring about permanent changes to international trade and investment flows between Russia and the West.
When asked about the ESG (environmental, social, and governance) in relation to the conflict, half (50%) raised concerns that the intervention will set ‘net-zero’ goals back. A further 9% believe that stocks in the defence industry should now be considered legitimate ESG investments, with this sentiment garnering the most enthusiasm amongst those aged 18-32 (20%) and those with the largest portfolios (17%), respectively.
Giles Coghlan, Chief Currency Analyst, HYCM said: “Two months on since Russia sent troops into Ukraine, news bulletins predicting prolonged aggression with ruinous consequences for the global economy have dominated the media. If the headlines foretelling chaos in the markets are to be believed, one would be forgiven for thinking that investors have been rocked by the crisis and left scrambling to protect their portfolios. Our research shows that this is not the case.
“Despite ever-mounting concerns over inflation, commodities, and the prospect of wider conflict, retail investors have held their nerve so far. While they clearly hold strong views about the sanctions placed on the Russian economy and the various possible scenarios that could unfold, many are shutting out the din of current events as far as their strategies are concerned. Rather, the vast majority appear attuned to the bleak reality that the market reaction to these events can be surprisingly mild. Indeed, when a crisis is staring us in the face, sometimes switching off the news is the wisest option.
“It is impossible to predict what may happen next – but make no mistake, investors remain wary about the prospect of long-term changes to the economic landscape, despite the lack of action so far.”