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8 Apr 2022 - Hedge Clippings |08 April 2022



Hedge Clippings | Friday, 08 April 2022


The longer the war in Ukraine continues, so the stakes are rising.

Initially expected to be a quick and easy victory, six weeks later it seems an early resolution is unlikely. The Ukrainian's brave, gritty and effective defense, and the Russian's misguided tactics and leadership, have been a revelation to most, as have the horrors of war as Russian atrocities come to light.

While the Ukrainians are fighting for their country and their lives, their allies and supporters cannot afford to let them lose. Meanwhile Putin, having miscalculated badly, also can't afford - or at least be seen - to lose. Presumably his face-saving solution is a partial win by occupying and annexing Donetsk and Luhansk (now claimed to be the original intention) to add to Crimea, which was previously annexed in 2014.

Even if Russia prevails and actually wins the war, Ukrainians are unlikely to simply submit. A military win would merely be the start of a long, bloody and painful occupation of Ukraine, until the occupying Russian forces eventually withdrew, as they previously did after almost 10 years in Afghanistan. Even in that circumstance, we assume that Europe, the US, and the rest of the civilised countries of the world would continue to isolate Russia economically and culturally.

A "partial" victory - even assuming it came to pass - might help to save face for Putin, but whatever the outcome, it is unlikely to end the economic sanctions currently and increasingly being imposed on Russia and its economy. If anything, one assumes (or hopes) the pressure will increase. The problem is that those same sanctions are in turn impacting the nations imposing them, particularly in Europe where they're paying the price for their dependence on Russian energy and resources.  

In the meantime, Australia's resources sector has been a beneficiary, as evidenced by March returns from funds with appropriate exposure such as Paragon (+23.69%) and Argonaut (+11.6%).

Meanwhile the global economy, already facing headwinds from inflation, increasing interest rates, and a potential slow down in China, leads us to ponder the chances of a global recession, and ask the question: "Are equity markets appropriately pricing in the risk?"

News & Insights

New Funds on

Quarterly Update & Outlook Webinar (1-Apr) | Laureola Advisors

10k Words - March Edition | Equitable Investors

Volatility, Uncertainty, and War | Laureola Advisors

Another era of quantitative tightening beckons | Magellan Asset Management

March 2022 Performance News

AIM Global High Conviction Fund

Argonaut Natural Resources Fund

Bennelong Kardinia Absolute Return Fund

Bennelong Emerging Companies Fund

DS Capital Growth Fund

4D Global Infrastructure Fund

Bennelong Concentrated Australian Equities Fund

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