Unfortunately, a quick end to the Ukraine war is not in sight. The human suffering is assuming ever greater proportions. It is to be expected that the sanctions could also be further tightened.

Russia, as intended, has been hit hardest by the sanctions so far. But the risks for the global economy are increasing, especially in the event of a further tightening of the sanctions. Europe, with its geographically increased ties to the parties involved in the conflict, is the most exposed to the uncertainties.

The rise in oil and gas prices is particularly striking. At the beginning of the week, North Sea oil traded at times above 130 US dollars per barrel, more than 60 percent higher than at the end of 2021. The high energy prices are being felt all over the world. On the one hand, consumers have less money available for other expenses after buying petrol or heating oil. The margins of companies are also threatened in such an environment in view of rising purchase prices. On the other hand, high energy prices further complicate the task of central banks. They should actually be actively fighting inflation now, especially since the new price shock has significantly increased the danger of inflation. But at the same time, the scope for action is shrinking due to the increased economic risks.

Risk reduction advisable

The increased uncertainty is reflected in large movements on the financial markets. The stock markets recently slid deeply into the red. Only shares from the energy sector were able to escape this negative development. Particularly affected - apart from Russian shares - is the European stock market, which lost 12 percent last week alone. Only the Swiss and British stock markets proved somewhat more resilient.

In such crises, the advantages of a diversified investment strategy become apparent once again. With regard to current developments, it is important to note that Russian investments already made up a very small share of portfolios at the beginning of the crisis. With the exclusion of shares from the broad stock market indices, Russian shares are now no longer bought at all.

The share of European equities in our e-asset management portfolios is in the mid single-digit percentage range. We decided at an extraordinary investment committee meeting at the beginning of the week to further reduce this share.

Further major turbulence on the financial markets is to be expected in the coming weeks. It is not easy to remain calm in such times. But well thought-out decisions will pay off. Safe investments such as government bonds and gold have gained recently and will continue to bring stability to portfolios. However, given the increased global risks, it makes sense to reduce risks in portfolios. We have done this with our decision to underweight equities. We will continue to monitor the situation closely for our clients.