Page 55 - DIY Investor Magazine | Issue 33
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     For now, global earnings estimates are still rising. Led by the energy and resources sectors which have seen the largest forecast earnings upgrades following the implementation
of sanctions on Russia, this is likely to be a one-off benefit
concentrated in these few sectors. It also represents input cost pressure for the remainder of the market and strains consumer budgets.
At present, almost all scenarios for the outcome of the war in Ukraine appear to leave Russia largely isolated from the world economy over the medium-term and possibly until there has been change of regime.
As a result, for many investors Russia will remain off-limits and the substantial discount for Russian assets is likely to persist.
Given the entrenched nature of Putin’s administration any handover of power may take some time as the only legitimate mechanism for change is internal pressure within Russia. Past experience suggests a relatively long period of lowered living standards may be required to convince Russian voters of the need to end sanctions and reintegrate into the global economy. There is also the possibility is that the popular opinion
instead switches to a siege mentality, centred on the current leadership.
DIY Investor Magazine · Apr 2022

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