The war in Ukraine is filled with countless uncertainties and atrocities, even extending to financial markets all over the world. While the war initially brought elevated energy prices and numerous sanctions against Russia, there are still plenty of unknowns about how it will impact economies and markets long term. The Globe and Mail recently turned to Sightline Wealth Management to help investors better understand what the future may hold for their portfolios as the war in Ukraine continues to unfold.
“Some investors may be thinking, ‘Okay, once this war ends, things will go back to normal,’ but that’s likely not the case,” says Sightline Senior Investment Advisor Paul de Sousa. He explains how decades of fostering trade ties with Russia and other former foes like China have “been unraveled in a few months.”
Now, the U.S. is focused on reducing reliance on supply chains from China, in part to ensure the
traditional tilting of portfolios toward U.S. and Canadian markets remains. However, de Sousa tells The Globe and Mail that the “blueprint to re-establish” manufacturing capacity still needs to be established.
“Because labour here is much costlier than in China, it’s a tall task and could further the inflation narrative,” he explains. In the meantime, investors can hedge their portfolios against inflation by incorporating commodities, their producers and transportation companies into their asset allocation mix.
Regardless of how much investors prepare, however, de Sousa says that with this war, the only certainty is uncertainty. “Definitely prepare for volatility,” he cautions.
Subscribers to The Globe and Mail can read the entire article here.
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