TRANSFORMATION OF GLOBAL CAPITAL MARKETS UNDER THE INFLUENCE OF MILITARY AGGRESSION AGAINST UKRAINE

Abstract

The Russian Federation, which started the war against Ukraine, since February 24, 2022, has destabilized the supply of many goods and resources, and has also significantly affected financial and investment activities in the world. The scale of the conflict between Ukraine and the Russian Federation has gone beyond local wars and is becoming a new civilizational challenge. In this regard, the global economy and international capital markets are being significantly transformed, the risks of trade, economic and financial and investment cooperation in the world are under significant threat. At the same time, global capital markets entered 2022 at peak values, but the achievement of 2021 was completely leveled. The global investment environment has largely destabilized, the budgetary and business losses in the world from the war have become enormous.

Global capital markets, especially the securities market, reacted very sensitively to the war in Ukraine, dropping significantly. Thus, the leading US and world index S&P 500 has fallen by 17% since the beginning of the year; The world's leading technology index, the NASDAQ Composite, is down 28% year-to-date. The European EURO STOXX 50 indices are also down 15% since the beginning of the year. At the same time, the general trends are downward, pointing to their further decline. The world's most popular and most capitalized crypto assets have also significantly lost their value, declining significantly over the last 3-4 months of 2022, reinforcing their reputation as too volatile and speculative asset. Ukrainian large companies in the international capital markets under the influence of hostilities also significantly lost their value and liquidity. Their capitalization on international stock exchanges has significantly decreased since the beginning of the war (approximately 2-1.7 times). Trends in the leading global capital markets suggest that the war in Ukraine has significantly reduced the activity of international investors in the capital markets and "appetite for risk assets." Most investors try to invest in safer assets under such conditions.

 The supply of many resources and goods on the world markets does not correspond to the level of demand due to the military actions on the territory of Ukraine, which in turn deforms the investment and financial global markets. Excess liquidity is transferred to goods and companies that produce corresponding scarce resources. In the future, this significantly increases the price level, intensifying inflationary processes in the world. Oil-import dependent countries are expected to face widening budget and trade deficits, as well as rising inflationary pressures. Deteriorating external financing conditions could accelerate capital outflows and exacerbate growth constraints in countries with high levels of debt and significant financing needs. Existing challenges could lead the world and global capital markets to a global debt crisis.

For Ukraine, which is in a state of war, when investments have been suspended and economic processes have been reduced, significant international assistance is needed, especially financial and economic (financial technical assistance, grants, preferential loans, cancellation of public debts, etc.). In order to overcome the consequences of war and global destabilization, in our opinion, it is necessary to form an updated international system (program) of relations and fair financial and investment support, especially for Ukraine, which suffered the most from aggression, as well as for the poorest countries of the world that are experiencing significant socio-economic the problems of this war.