KEY THEMES
Global equities fell under severe pressures this morning, where safe havens alongside with other commodities surged. The most recent escalation in the Russia-Ukraine situation saw Russia firing missiles at various Ukrainian cities, while troops landed on its south coast. This took place shortly after Russian President Vladimir Putin said he had authorized what he called a special military operation.
The oil market dealt with the news by sending Brent oil prices beyond the USD100/bbl mark for the first time in eight years. While the U.S. dollar has strengthened, gold prices were up too, with similar price action seen over other commodities including natural gas, aluminum, copper, wheat, corn, and soybeans.
It is unclear if Russia will only be subject to much tighter sanctions at this point, or we will have in our hands a wider range military combat. Strategic thinking seems a very challenging task in this specific situation, as investors enter risk off mood. Meanwhile, from a tactical standpoint, commodity linked stocks with local feedstock could come out as winners if the situation persists. Names such as Abu Qir Fertilizers [ABUK], Misr Fertilizers Production [MFPC], EK Holding [EKHO], Egyptian Financial and Industrial [EFIC], Egypt Aluminum [EGAL], Misr Chemical Industries [MICH], Sidi Kerir Petrochemicals [SKPC], Qalaa Holdings [CCAP], and Alexandria Mineral Oils [AMOC] should benefit depending on the direction and the degree of escalation between Russia, Ukraine, and NATO.