Markets brace for escalating Ukraine crisis, with troops moving along the Ukrainian border and intensified shelling in the Donbass region, according to a report by UBS on Wednesday.
Market drawdowns attributable to disputes between countries are usually temporary. Meanwhile, the greatest risk for globally diversified investors from such crises is overreacting and exiting the markets.
In the long run, the crisis would have a massive impact on the macroeconomic backdrop, with disruptions to oil and gas movements to Europe and wider constraints on agricultural commodities and industrial inputs.
Mark Haefele UBS AG recommended the diversification of portfolios and maintaining a long-term investment plan in case of long-drawn geopolitical tensions.
Haefele further recommended allocations to commodities and energy stocks as attractive options to help investors in hedging portfolio risks.
UBS calls for investors to prepare for both the diplomatic and risk case outcomes by focusing on diversification, a long-term investment plan and geopolitical hedges while preparing portfolios for rate hikes.