Around the middle of February, the geopolitical playbook was highlighted. In that article, it was noted that serious armed conflicts were often surprisingly short-lived in terms of market impact. In terms of the S&P500’s impact, the average fall through big geopolitical events had only been a total drawdown of -6.1%. You can read the full piece here for a recap.

The Global Stocks Recovery

Bloomberg reported that the rebound in global stocks has now been completed bar emerging market stocks. If you take a look at the chart below you can see that the S&P500 only skirted with around a -2.5% drawdown. When you consider the large human cost of armed conflict it is perhaps surprising that the financial impact can be so limited. It was emerging markets that saw the greatest drawdown with over -10% falls which came around one month after the initial post referenced above on March 15.

Russia’s MOEX index remains depressed

Although trading has resumed in Russia the MOEX index is down over 40% on the year. The chances of the Russian index quickly rebounding are low as confidence in Russian stock will take some considerable time to recover. Also, it should be noted that the Russian stock market is not as important to the Russian economy as its counterparts would be in the UK, US, or Europe. The total value of the Russian stock market is around $400 billion. When you consider that the market capitalisation of Visa alone is worth more than the entire index that puts it into perspective. It also shows that even though the general playbook for geopolitical risk is to buy the dip there are nuances to keep aware of.