What’s happening in
Ukraine is a Black Swan event; it’s worse than the worst-case scenario that has been put on paper over the past couple of months, and it’s clearly not a limited military operation, it’s really a full invasion of a country, that no one could explain other than Putin’s regret for the Soviet Union’s demise and his unacceptance of the post-Cold War security architecture.
Sanctions are being imposed on Russian financial sectors, transport, and exports. Major economies will stop financing the Russian debt and cut the provision of semiconductors. Taiwan’s chipmaker TSMC said it’s fully committed to complying with new export rules. But there are sanctions that didn’t go through.
Europe for example opposed to leave the Russian banks out of Swift, and Biden won’t impose sanctions on Russian energy, aluminum, and wheat industries to avoid penalizing the rest of the world.
Still, the Russian energy companies are taking a very heavy toll right now. Gazprom shares dived up to 50% yesterday before closing the session 25% lower. Lukoil sank near 45% and closed almost 23% down, while the Moscow Exchange lost up to 30% before closing 20% lower. That’s understandable as Russian companies will be cut off from the rest of the world in terms of business and financing. But it is also said that only about 16% of the Russian companies’ cash holdings are in US dollars, the rest is in Chinese yuan, euro and gold, to help the companies carry on, at least for a while, as the crisis extends.
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