Should You Really Sell In May?
Cam Hui | Apr 28, 2014 12:27AM ET
In early April, I wrote about risk appetite rolling over (see ZH postulated the Russian response would be to retaliate in kind, regardless of whether Putin's personal funds are involved in the sanctions:
Russian presidential adviser Sergei Glazyev proposed plan of 15 measures to protect country’s economy if sanctions applied, Vedomosti newspaper reports, citing Glazyev’s letter to Finance Ministry. According to Vedomosti as Bloomberg reported, Glazyev proposed:
- Russia should withdraw all assets, accounts in dollars, euros from NATO countries to neutral ones
- Russia should start selling NATO member sovereign bonds before Russia’s foreign-currency accounts are frozen
- Central bank should reduce dollar assets, sell sovereign bonds of countries that support sanctions
- Russia should limit commercial banks’ FX assets to prevent speculation on ruble, capital outflows
- Central bank should increase money supply so that state cos., banks may refinance foreign loans
In other words, a full-blown scorched earth campaign by Russia.
- Russia should use national currencies in trade with customs Union members, other non-dollar, non-euro partners
While I tend to take anything published at ZH with a grain of salt, they may not be that far off this time. Oleg Babinov of The Risk Advisory Group wrote the following in March about the Crimean crisis and the likely response from the Kremlin is roughly in line with the proposals outlined in ZH (via
Disclosure: Cam Hui is a portfolio manager at Qwest Investment Fund Management Ltd. (“Qwest”). The opinions and any recommendations expressed in the blog are those of the author and do not reflect the opinions and recommendations of Qwest. Qwest reviews Mr. Hui’s blog to ensure it is connected with Mr. Hui’s obligation to deal fairly, honestly and in good faith with the blog’s readers.”
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