empty
08.03.2022 07:07 AM
Confusion reigns in global finance

Western allies' sanctions against Russia have started to blow back in the form of large potential losses for their own banks, companies and investors, often in unexpected ways. In the past, such fires have been precursors to financial crises. Nevertheless, some market participants say that there is no panic in the market.

This image is no longer relevant

Investment company employees, for example, admit that they "haven't had any of those 'holy shit' phone calls", referring to the avalanche of 'sell everything' calls that come down on brokers at moments of market collapse. On the contrary, many are wondering whether it makes sense to invest in assets while they are down on the market.

"There is so much more capital in the system. Russia is not that big. Risk management is better," Schamis said, comparing the situation now to the financial crisis in 2008 when he had a front-row seat as someone with capital to invest.

Indeed, banks have fat buffers this time around.

The Federal Reserve said on Friday, financial institutions placed more than $1.4 trillion overnight. This indicates that investors are rushing to pour unused balances into circulation in the run-up to the rate hike. It shows there is enough capital in the financial system to absorb losses from the Ukrainian invasion.

Nevertheless, weaknesses in the global economy, caused by the disruption of production and settlement chains with Russia, are growing.

From Societe Generale SA and BP Plc in Europe to Citigroup Inc in the United States, Western companies have tallied up billions of dollars in exposure to Russia, money that they could lose.

One major US bank has estimated that the cumulative cost of failing to cooperate with Russian companies and the Central Bank could be around $400 billion.

The shock is being felt in unexpected places.

In Germany, for example, the debt authority has had to increase the size of the bond to ease conditions on overnight lending markets in the eurozone, the most important source of credit for banks and other financial institutions.

Bunds are used as collateral in the market, but there has been a shortage. The Germans have said they suspect some of the bonds are held by sanctioned entities that cannot trade.

In Russia, internet companies Ozon Holdings Plc and Yandex NV could face nearly $2 billion in unexpected bills after trading in their U.S. listed shares was suspended after the sanctions. That could trigger a clause in their debt agreements that makes some of their bonds redeemable. Yandex said it doesn't have the money to pay investors.

The disparate nature and the geographical spread of these fires are some of the hallmarks of financial contagion, the idea that losses can quickly barrel through a deeply interconnected system in ways that no one can fully predict. At some point, as losses spread, market participants panic and withdraw, freezing credit and precipitating a broader financial crisis.

Nevertheless, experience of market behavior during a pandemic has shown that economies are quite capable of handling multiple systemic shocks without stock market panic.

Former Commodity Futures Trading Commission Chairman Timothy Massad was deeply involved as a Treasury official in the US government's handling of the 2008 financial crisis. Following many analysts, he believes that the system is well able to absorb the shock, and he hasn't noticed anything that raises serious concerns about financial stability.

Even so, the situation is rapidly evolving. "I don't think this is a stable situation," said Massad. "What concerns me the most is how long this goes on and whether something happens in the war that triggers a much bigger shock or triggers panic."

The attack Friday on Ukraine's nuclear plant was troubling, he noted.

Some signs of stress have started to appear in markets, with investors shedding riskier assets. Banks are getting nervous about lending to each other and hoarding dollars, which are getting more expensive for foreigners to procure. However, these indicators are well below the peaks seen during full-blown crises and the market's plumbing is holding up.

Moscow abruptly ordered brokers to reject sell orders by foreigners for Russian securities on February 28. That meant any orders to sell rouble-denominated Russian government bonds that had not settled by then were stuck. By one estimate, hundreds of millions of dollars' worth of proceeds might be frozen, but even then market participants say the hit to portfolios is not large enough.

For now, the word on the Street is more of confusion than panic. People are working through what the raft of sanctions against Russian banks, assets and individuals means for their dealings and holdings, market participants say.

"The danger comes from the fact that you have long intermediation chains that make it difficult to know what exactly the exposure and the risks are," Massad says.

Of course, the loss of one of the world's major counterparties can shake up the business and financial world. However, using the experience of the Russian default in 1998, it cannot be said that the world economy suffered a shock. It was only a shock to the Russians. For Americans, for example, the 1990s are remembered as a period of maximum prosperity. A far greater test for the world was the pandemic restrictions. And, among other things, it is a reason for Russians to think about their role in the global financial pie.

Egor Danilov,
Chuyên gia phân tích của InstaForex
© 2007-2025
Chọn khung thời gian
5
phút
15
phút
30
phút
1
giờ
4
ngày
1
ngày
1
tuần
Kiếm lợi nhuận từ những biến đổi giá của tiền điện tử với InstaForex.
Tải MetaTrader 4 và mở giao dịch đầu tiên của bạn.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    THAM GIA CUỘC THI

Các bài báo được đề xuất

Boeing tăng, Best Buy giảm khi nhà đầu tư cân đối lại giữa các ngành

Cổ phiếu Best Buy giảm sau khi công ty này cắt giảm dự báo doanh thu và lợi nhuận cả năm. Mặt khác, Boeing lại tăng vững

13:49 2025-05-30 UTC+2

Tin tức thị trường Mỹ ngày 30 tháng 5

S&P 500 đã mở phiên giao dịch với tín hiệu tích cực nhưng nhanh chóng đảo chiều sau khi các quan chức làm rõ rằng các mức thuế

Ekaterina Kiseleva 12:20 2025-05-30 UTC+2

Boeing Tăng Giá, Best Buy Giảm: Tại Sao Nhà Đầu Tư Đặt Cược Vào Các Tài Sản Khác Nhau

Cổ phiếu Best Buy giảm sau dự báo doanh thu và lợi nhuận cả năm bị thu hẹp Boeing tăng giá khi CEO tìm cách đẩy mạnh sản xuất dòng

Thomas Frank 10:10 2025-05-30 UTC+2

Tin tức Thị trường Mỹ ngày 29 tháng 5

Thị trường đã phản ứng với phán quyết của Tòa án Thương mại Quốc tế Hoa Kỳ cho rằng các biện pháp áp thuế của chính quyền Trump đã vượt

Ekaterina Kiseleva 11:15 2025-05-29 UTC+2

Cơn bão cổ phiếu: Nvidia tăng vọt, Dow giảm, tòa án hạ bệ thuế quan của Trump

Cổ phiếu Nvidia tăng 5% sau giờ đóng cửa; công ty báo cáo kết quả quý Dick's Sporting Goods tăng sau khi kết quả quý 1 vượt kỳ vọng

Thomas Frank 10:49 2025-05-29 UTC+2

Từ Nvidia đến Xiaomi: Điều gì thúc đẩy tăng trưởng và suy giảm thị trường chứng khoán hôm nay

Các chỉ số tăng: Dow 1.78%, S&P 500 2.05%, Nasdaq 2.47% Khả năng tin cậy của người tiêu dùng phục hồi trong tháng Năm Cổ phiếu của công

Thomas Frank 12:06 2025-05-28 UTC+2

Ai không mạo hiểm với suy thoái thì không giảm nợ quốc gia? Lịch dành cho nhà giao dịch từ ngày 29-31 tháng Năm

Ở tâm điểm của sự chú ý toàn cầu và "định hình số phận của hành tinh" — đó là điều mà Donald Trump thích nhất. Đối với ông, việc

Svetlana Radchenko 11:47 2025-05-28 UTC+2

Bản Tin Tiêu Điểm Thị Trường Mỹ Ngày 28 Tháng 5

Chỉ số S&P 500 đã phá vỡ mốc quan trọng 5,908, gợi ý rằng đợt điều chỉnh gần đây đã kết thúc và mở ra cơ hội tăng trưởng

Ekaterina Kiseleva 11:25 2025-05-28 UTC+2

Bản Tin Tiêu Điểm Thị Trường Hoa Kỳ ngày 27 tháng 5

Tổng thống Mỹ Donald Trump tuyên bố áp thuế 50% lên hàng nhập khẩu từ EU, tuy nhiên các thị trường tài chính đã phản ứng một cách thận trọng

Ekaterina Kiseleva 11:54 2025-05-27 UTC+2

Nvidia trong chương trình nghị sự: thị trường chờ đợi báo cáo quý, đồng đô la gần chạm mức giảm tháng thứ năm liên tiếp

Wall Street chuẩn bị cho một phiên mở cửa mạnh mẽ sau cuối tuần vào thứ Hai Các nhà đầu tư tập trung vào báo cáo tài chính của Nvidia

Thomas Frank 11:31 2025-05-27 UTC+2
Không thể nói chuyện ngay bây giờ?
Đặt câu hỏi của bạn trong phần trò chuyện.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.