Columbia Threadneedle: Ukraine reaction

February 24, 2022

By William Davies, Global Chief Investment Officer, Columbia Threadneedle Investments

We are already seeing a risk off sentiment across emerging markets, as the possibility of imposed sanctions increases, although Russia and Ukraine together comprise around 3.5% of the Emerging Market Debt hard currency index.

From a credit perspective, most Russian companies are at the lower end of Investment Grade ratings and could be downgraded to High Yield as a result of sanction risks.

We expect to see an increase in energy prices and grain prices across emerging markets which is likely to have an impact on commodities globally.

As with other major geopolitical situations we anticipate there will be volatility in markets and while we invest with conviction we do not ignore the impact of globally-driven events on the companies and industries in which we invest, in addition to the impact on economies more broadly. Furthermore, we incorporate these considerations as part of our responsible investment approach, providing stewardship of assets which support the welfare of society.

As the situation in Ukraine unfolds, we remain focussed on our investment process: being active, long-term investors in companies with strong balance sheets and solid fundamentals, employing our research intensity capabilities. We will continue to monitor the situation and ensure that we manage our clients’ assets actively and responsibly, maintaining a global perspective.