Ukraine crisis: Asia’s investors remain in wait

Investors in Asia are looking forward to developments in Ukraine – and are waiting. The stock exchanges hardly moved in morning trading.

Investors on Asia’s stock exchanges are also waiting for the time being.

Ahn Young-Joon / AP

Investors on Asia’s stock exchanges continued the trend from the USA in morning trading: They waited to see whether Russia would attack Ukraine. While the Dow Jones index on Wall Street fell by only 0.5 percent to 34.566 points on Monday, stock and foreign exchange rates in Asia hardly moved.

Korea’s Kospi Index and Singapore’s Straits Times Index traded around the previous day’s level. The two major Chinese indices, the Shanghai Composite Index and the Hong Kong Hangseng Index, which are often driven by Chinese developments, also remained in wait.

Asia’s largest and most liquid market hit the hardest: Japan’s Nikkei 225 index fell by just over 0.5 percent and then went into the lunch break at 27,006.66 points, 0.27 percent below Monday’s closing price.

The big bank ING blamed hints from Russia and other nations that there is still room for negotiations. This seems “to help dampen the turmoil that has gripped the markets in recent days,” ING said on Tuesday morning. But the ING strategists do not believe in a turnaround. Risk appetite is unlikely to return unless there is a more concrete solution to this problem.

Japan: Investors are not moved by positive growth data

Hardly any impetus comes from Asia. Countries are more likely to join one of the warring camps: China has expanded its cooperation with Russia, while America’s ally Japan is threatening Russia with sanctions if it attacks Ukraine. Details are currently being finalized jointly by the foreign, finance and economic ministries and coordinated internationally.

Not even positive economic data could move investors in Japan: In the last quarter of 2021, the gross domestic product of the world’s third-largest economy was 1.3 percent higher than the previous quarter. That wasn’t just the first increase after two negative quarters.

Japan grew again after the Corona crisis of 2020, albeit only moderately by 1.7 percent. This value is significantly worse than that of its neighbors: In South Korea, the economy grew by four percent, in the semiconductor stronghold Taiwan by as much as 6.3 percent and in China by 8.1 percent.

But Maki Sawada, a strategist at Japanese investment bank Nomura, also sees the downturn in stock prices as an opportunity to buy into companies cheaply. The prospect of rising interest rates in the USA and the uncertainty in Ukraine would weigh on prices, she said on Tuesday. But some stocks that are cheap from an investor’s perspective are at a level “where it’s easy to buy on a squeeze.” But Sean Darby, strategist at Jefferies, warns: “Is the worst over? Not yet.”

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