UK investors have remained composed amid the events surrounding Russia’s invasion of Ukraine, but they hold strong views on the future market implications of the crisis, according to new research by online trading services provider HYCM.
“Two months on since Russia sent troops into Ukraine, news bulletins predicting prolonged aggression with ruinous consequences for the global economy have dominated the media,” said Giles Coghlan, chief currency analyst at HYCM, in a press release. “If the headlines foretelling chaos in the markets are to be believed, one would be forgiven for thinking that investors have been rocked by the crisis and left scrambling to protect their portfolios. Our research shows that this is not the case.”
The survey reveals that just 14% of the UK’s retail investors monitor the situation in Russia and Ukraine when thinking about their investment strategy. In addition, only 14% of the respondents said they were investing more carefully than before the conflict began, because the risk of wider conflict is higher.
About 12% of the investors that participated in the survey agreed that stocks and shares are secure asset classes in the current climate. In addition to this, 10% of investors said they had changed their investment strategies since the conflict began, while another 10% said that they saw the Russian invasion of Ukraine as a buying opportunity as they believe the war will have little impact on financial markets.
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Some 9% of respondents stated that stocks in the defence industry should now be considered as legitimate environmental, social, and governance investments in light of the conflict.
Only a small number of UK retail investors said that were concerned that their portfolio is overly reliant on Russia and may be impacted negatively if the ruble crashes.
Despite the Russia-Ukraine conflict leaving UK retail investors mostly unshaken, the survey also revealed that 69% of respondents believe that the war will result in permanent changes to international trade and investment flows between Russia and the West.
It also made clear that UK retail investors hold strong views about sanctions related to the conflict, with 67% of respondents being positive about consumers and investors boycotting companies that continue to do business with Russia. In addition, 44% of respondents said that they would reconsider their investments that have exposure to countries or companies that support Russia’s invasion.
Moreover, 37% considered increasing their investments into what they believe to be safe haven assets in case the war escalates or develops into a protracted conflict. About one-quarter of respondents also said that they are planning to increase their investments in defence stocks and cybersecurity should the war escalate.
Just under 60% of the respondents said they believe that the long-term uncertainty in the energy market resulting from the invasion will result in an increase in investment in green metals, nuclear energy and cleaner energy stocks. About 50% of the investors also agreed that the conflict set back net-zero goals.
The survey shows that investors remain cautious about the changes to the economic landscape following the Russian invasion of Ukraine, even if some of the more dramatic knock-on effects of the conflict have yet to materialise. With many investors taking action should the war escalate or become more prolonged, however, this sanguine attitude could be altered.