The crisis in Ukraine may have slipped from the headlines briefly, but the increasing risks it poses shouldn’t be far from investors’ minds.
A week-long ceasefire, which ended at 10 p.m. local time on Monday, had offered breathing space for a negotiated settlement of Ukraine’s conflict. After its conclusion, with no solution in sight, “the risk is rising,” analysts at Teneo Intelligence wrote in a research note.
There was a distinctly militaristic tone to new President Petro Poroshenko’s statement late on Monday that: “We will attack and free our lands. The decision not to continue the ceasefire is our answer to terrorists, militants and marauders.”
Russia’s main stock index, the Micex, fell 0.34 percent Tuesday morning, and the ruble fell by 0.7 percent against the dollar. Russian bond sales have slowed to a trickle since the crisis erupted, and a raft of Russian companies is expected to issue new bonds later this year, as debt repayments become due. These may be under threat if the region still looks unstable.