Hitting Russia where it hurts
The piling up of sanctions against Moscow is making it difficult for Russian firms to operate, says John Stepek.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Twice daily
MoneyWeek
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Four times a week
Look After My Bills
Sign up to our free money-saving newsletter, filled with the latest news and expert advice to help you find the best tips and deals for managing your bills. Start saving today!
It appears that US president Donald Trump may finally have figured out how to hit Russia where it hurts. Last Friday, the US Treasury put seven Russian oligarchs, 12 businesses and 17 government officials on its Specially Designated Nationals list, which prohibits US citizens and companies from doing business with them.
The big difference this time round, as Marcus Ashworth points out on Bloomberg, is that the US government has also threatened secondary sanctions in other words, it has warned that it will also levy sanctions on anyone for "knowingly facilitating significant transactions for or on behalf of" those it has targeted in the latest round. As a result, says Ashworth, "a wide range of transactions involving Russia are now incredibly tricky for global economies and markets. The motto for all becomes if in doubt, don't touch'".
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
That's already sinking in, as investors sold Russia heavily in the wake of the news. Indeed, the whole situation has left Russia looking very cheap on a global basis. It's never been a market that I have been terribly keen to invest in (particularly not now that I need to worry about being able to get my money back out), but it is also fair to say that markets only ever get this cheap when the risks involved are high, so if you have an appetite for this sort of thing, now may be your chance. Just make sure that it's money you can afford to lose.
But this isn't just about Russia. It's also another major warning flag to investors who grew up in the heyday of globalisation, when capital and (to an extent) labour flowed freely across borders, that we have moved well beyond what some of us had perhaps assumed was "business as usual". The things we took for granted in the past easy access to exotic markets, a general consensus that globalisation and ever-growing levels of trade are good things, and that governments were largely on the same page when it came to free markets are now up for discussion again.
On the other hand, while politics and relationships in much of the developed world are deteriorating, we're seeing improvements in other areas that have long been troubled my colleague Matthew Partridge looks at the opportunities in one such area, sub-Saharan Africa, in this week's cover story.
-
Average UK house price reaches £300,000 for first time, Halifax saysWhile the average house price has topped £300k, regional disparities still remain, Halifax finds.
-
Barings Emerging Europe trust bounces back from Russia woesBarings Emerging Europe trust has added the Middle East and Africa to its mandate, delivering a strong recovery, says Max King
-
Inflation may be slipping but there is still plenty of misery aheadEditor's letter Inflation may be a little lower than last month as the prices of petrol and diesel fall back, but it remains structural and long-term, says Merryn Somerset Webb. And there are no painless solutions.
-
Beat the cost of living crisis – go on holidayEditor's letter As inflation rages, energy bills soar and the pound tanks, what’s a good way to save money this winter? Go on holiday, says Merryn Somerset Webb.
-
How to tackle rising inflation and falling stockmarketsEditor's letter Inflation is rising around the world. Even though inflation is widely expected to return to around 3.5% next year, it is still wreaking havoc. Merryn Somerset-Webb explains what to do about it.
-
How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
-
Don't be scared by economic forecastingEditor's letter The Bank of England warned last week the UK will tip into recession this year. But predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, says Andrew Van Sickle.
-
The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
-
The wolf returns to the eurozone’s doorEditor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
-
Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
