ANZ – Market Commentary

7 March, 2022

We have requested the ANZ New Zealand Investment Ltd, one of our Fund Managers to provide some market commentary, please see below comments.

The Russia-Ukraine situation moves to front and center

As we have previously reported it’s been a busy start to 2022, with volatility reaching levels not seen since the early stages of the pandemic as geopolitical tensions in Eastern Europe spilled over when Russia invaded Ukraine.

As we start March, it’s apparent that the geopolitical unrest in Eastern Europe will be a predominant driver of market sentiment. However, before we start, it would be remiss not to mention the civilian tragedy we have already seen as Vladimir Putin seeks to extend his power beyond Russia.

From an investment perspective, we are looking at the situation from several angles. Firstly, we have seen a spike in the price of commodities, with Russia a significant exporter of many of these – most notably oil and gas. Should commodity prices continue to rise, or even remain elevated, it will only add to the ongoing concerns around inflation. Furthermore, rising energy prices will cause headwinds for the European economy, which sources a significant amount of its energy from Russia.

Secondly, we are monitoring the implications of the sanctions placed on Russia, and any retaliatory measures that could destabilise western companies and industries.

No Investments in Russia

In spite of the current significance and influence of the Russian – Ukraine situation it is important to note that, in respect of the assets managed by ANZ Investments, there are no investments in Russian equities or bonds.

ANZ is still constructive on the global economy

Despite the abundance of news, most of which may seem negative (Russia’s invasion, elevated inflation, COVID-19), we remain relatively optimistic about the global economy on a medium to long-term basis. We are coming to the end of what was another relatively good earnings season, with numbers showing most companies continue to rebound nicely as the global economy continues its COVID-induced recovery.