Not the election of Donald Trump, not the US/China trade dispute. Not even Brexit. In all the time we have been writing this Monthly Bulletin, no single issue has so completely dominated a month’s news, or threatened to have such serious consequences, as the outbreak of Coronavirus in China.

That was how we started the Bulletin in February 2020. Exactly two years later, you could delete the last few words, insert ‘Russia’s invasion of Ukraine’ and the same introduction would be equally valid. Perhaps even more so.

Ukraine is a thread which runs through this month’s Bulletin. It directly impacts the sections on Europe and Emerging Markets. Stock markets all around the world were hit by the initial shock of Vladimir Putin’s decision. Clients have been understandably worried, and many have contacted us.

We have, therefore, added a special section on the events in Ukraine to this month’s Bulletin. It was written at 3 pm on Tuesday March 1st. We hope you will understand that the practicalities of getting the Bulletin to you mean some specific comments may be outdated by the time you read it. More so than in any other month, every comment we make should be read with the ‘at the time of writing’ caveat in mind.

Unsurprisingly, most of the stock markets we cover in the Bulletin were down in the month, although some did make gains and the UK’s FTSE-100 index held its ground. As always, let us look at all the detail, beginning with our special section on Ukraine.


The first three weeks of February were full of stories about the Russian build-up on Ukraine’s border, and speculation about the possibility of an invasion.

As everyone reading this Bulletin will now know, all the grim predictions were borne out. On February 24th, almost eight years to the day after it began the invasion of Crimea, Russia invaded Ukraine. World stock markets fell sharply at the news, although, as we will see below, some recovered lost ground and the greatest damage in percentage terms was done to the Russian market, which remained closed on Monday February 28th and Tuesday March 1st. The price of oil went in the opposite direction, rising about $100 a barrel, inevitably meaning higher petrol prices.

Many people will have wondered what the invasion meant for their savings and investments. At the time of writing, stock markets appear to be keeping their nerve. The international condemnation of Russia grows every day. The United Nations Security Council passed a resolution condemning the Russian action, perhaps significantly both China and India abstained in that vote.

Readers will be aware, that large numbers of countries have closed their air space to Russian aircraft and a raft of sanctions have been imposed. In retaliation, Russia has said it will impose sanctions of its own and, most worryingly, put its nuclear forces on the second of four stages of readiness.

One of the many sanctions has been the exclusion of Russian banks from SWIFT, evidenced on Monday as Russians were unable to pay their Netflix and Spotify subscriptions.

SWIFT stands for [the] Society for Worldwide Interbank Financial Telecommunication. Headquartered in Belgium, it serves as an intermediary and executor of financial transactions between banks worldwide. So, expelling Russia from SWIFT will have serious consequences.

However, it should be noted that Russia does have an alternative to SWIFT, known as SPFS, [the] System for Transfer of Financial Messages. The system was developed by the Russian Central Bank, after the Crimea invasion in 2014 and is used by Russia to trade with China, India and other countries.

Expelling Russia from SWIFT could mean that smaller countries still wanting to trade with Russia would be forced to use SPFS, and ultimately move more of their trade away from the West, towards the Russia/China/India trading bloc. China has a similar system, known as CIPS, which stands for the Cross-Border Inter-Bank Payments System.

Our thoughts are with the people of Ukraine, and any of our clients who have family or friends in the country.


House prices had a good start to the month in the UK, with Nationwide reporting that the housing market had enjoyed its strongest start to the year since 2004, with the average cost of a house 11.2 per cent higher than last year, at £255,556.

Enjoying a rather less successful start to the month were Prime Minister Boris Johnson, hit by a wave of resignations at No. 10 in the wake of the Partygate scandal, and Chancellor Rishi Sunak.

The Chancellor came in for widespread criticism over Covid loan fraud, as £4.3 billion has already been written off. There will also be defaults, with some estimates suggesting that as much as £20 billion will be lost to companies unable to pay back their loans. City AM, for example, has reported most UK hospitality firms as being on the point of collapse.

Despite all this, February had its share of good news, chief amongst which was the news that the UK economy had rebounded with growth of 7.5 per cent in 2021, despite falling back in December due to the Omicron variant. It was the fastest rate of growth since 1941, albeit after a fall of 9.4 per cent in 2020, with Rishi Sunak, commenting on the remarkable resilience of the economy. The Office for National Statistics, reported that the number of people on UK payrolls rose by one hundred thousand between December and January to 29.5 million, with City AM saying that demand for office space was once again soaring.

The Department of Trade, announced that the UK had moved into the second and final phase of accession to join the CPTPP, Comprehensive and Progressive Agreement for Trans-Pacific Partnership, free trade area, an £8.4 trillion trade bloc. The UK could apparently be a member of the bloc by the end of the year.

Meanwhile, UK inflation, fuelled by rising clothing costs, reached 5.5 per cent in January, up from 5.4 per cent in December; the fastest rate of growth for thirty years. In a bid to keep a lid on inflation, the Bank of England increased the base rate to 0.5 per cent, although four of the nine members of the Monetary Policy Committee voted for an immediate increase, to 0.75 per cent.

Rather than inflation, however, it was increases in the cost of energy prices that were on most people’s minds. Clearly, energy prices are going to rise. It was announced that the cap on energy prices will go up by £693 from April, but given the current situation in Ukraine, there are likely to be further increases in store. Bank of England Governor Andrew Bailey, warned that life will not get easier until 2023.

The UK’s beleaguered high street enjoyed a temporary reprieve in January as retail volumes increased by 1.9 per cent after a four per cent drop in December, but later in the month, it was revealed that seventeen thousand chain store shops had closed in 2021.

Russia’s invasion of Ukraine saw £77 billion wiped off the value of FTSE-100 stocks on Thursday 24th as the market had its worst day since June 2020. However, by the end of the month, the FTSE had dropped just six points, closing February at 7,458. The pound ended the month trading at $1.3407, unchanged in percentage terms against the dollar.


The month in Europe started with some prescient rumblings. Approval for the Nord Stream 2 gas pipeline was put on hold, with the EU doing everything possible to ensure that Russia is unable to use natural gas as a weapon.

At the time of writing, approval for Nord Stream 2 is suspended indefinitely, but that represents a huge potential problem for Europe. Almost a quarter of the EU’s petroleum oil imports come from Russia, but the proportion of gas is significantly higher at between forty and fifty per cent, depending on which report you read. The balance largely comes from Norway and Algeria.

Wholesale prices of gas have been rising sharply of late, and former Russian President Dmitry Medvedev, was quick to point out that they could rise even further in the very near future.

Away from the conflict for a moment, the Italian parliament re-elected Sergio Mattarella as President, in a move widely seen as opting for the status quo and preserving the country’s pro-EU stance.

The EU continued its onslaught on big tech with suggestions that agreement could be reached as early as April as it looks to clamp down on companies such as Google and Apple. The rules, proposed by EU antitrust chief Margrethe Vestager, have led to suggestions that Facebook could stop operating in Europe. As we report below, even without the EU threats, the company did not enjoy the best February on record.

February was not a great month for Credit Suisse either, as a huge data leak revealed the hidden wealth of several clients of the bank. Data on eighteen thousand accounts holding more than $100 billion was leaked, amid suggestions that some clients had been involved in drug trafficking and money laundering.

That was not the end of the banking sector’s problems. We have commented above on the Russian banks being excluded from SWIFT. However, it is generally accepted that Russian banks owe European banks around £37 billion. Monday 28th saw sharp falls in several European banks’ share prices over fears that exposed lenders could be hit by the sanctions. Banks in Italy and Austria are generally held to be the most vulnerable.

Both the major European stock markets were down in the month, with Germany’s DAX index falling seven per cent to 14,461. The French stock market dropped back by five per cent, to close the month at 6,659.


Goldman Sachs, has predicted four to five rate rises in the coming year, and has cut its growth forecast for both the first quarter and the full year. The Federal Reserve Bank of Atlanta, meanwhile, has forecast that the US economy would grow by only 0.1 per cent in the first quarter.

That was shortly followed by the news that the US national debt, which has tripled since 2010, had reached $30 trillion. That is equivalent to £22.4 trillion and, for most of us, is a number that is simply too big to comprehend.

Despite this, the US economy added 467,000 jobs as it shrugged off the Omicron variant. The unemployment rate did inch up from 3.9 per cent to four per cent, but that was due to more people looking for work.

This news came as the Association for Advancing Automation, or A3 as it likes to be called, announced that 2021 was a record year for robots joining the American workforce. A3 said that companies across the US spent $2 billion acquiring 40,000 robots, or $50,000 per robot.

Meanwhile, Facebook saw the first ever fall in Daily Active Users in its 18-year history. That led to the company stock market value dropping by $230 billion in one day, a record for a US company.

Ford announced that it was to spend up to $20 billion accelerating its move to the new economy. The company says it will spend the money on speeding up the switch to electric vehicles, with Chief Executive Jim Farley, declaring that Ford wants to challenge Tesla’s dominance in the electric vehicle market.

In keeping with the general trend, Wall Street was down in February. The Dow Jones index fell four per cent to 33,893, whilst the more broadly based S&P 500 index fell three per cent to close the month at 4,374.

Far East

February was, for once, a relatively quiet month in the Far Eastern section of the Bulletin. There has long been criticism of China, especially from the previous occupant of the White House, for its policy of keeping the yuan artificially low, thereby making its exports more competitive. It was the same story in February, with China fixing the yuan much lower than analysts had been expecting, in a move widely seen as a bid to boost an economy which has been flagging over recent months.

China is also pressing ahead with its digital yuan, and concerns were expressed in the US that the digital currency could ultimately be used as a surveillance tool.

In addition, there were worries that China could be building a significant lead over the West in sectors such as artificial intelligence and machine learning, with China markedly increasing its research output in this area. According to one study, China surpassed the combined AI/ML research of all the major European countries combined, as long ago as 2008.

However, will it still be current leader Xi Jinping, overseeing that growing dominance in AI? Xi came to power in March 2013, with the Constitution at that time stipulating that the president could serve no more than two consecutive terms. That term limit was removed in 2018, leaving most observers to conclude that Xi would be president for life.

Recently, a 40,000-word article criticising Xi’s mistakes was allowed to go viral in China, and doubts are now starting to emerge about a third term for Xi. The decision on his future will be made, or rubber stamped, at this autumn’s Party Congress.

Japan reached an agreement with the US on removing the Trump-era tariffs on around 1.25 million metric tonnes of steel imports a year. The move is aimed at eliminating unfair practices in the global steel market which is, inevitably, dominated by China.

Even in the Far East, the Russian invasion had the final word. Japan’s former Prime Minister Shinzo Abe, suggested that, given global tensions, the country should start nuclear sharing discussions with the US.

On the region’s stock markets, China’s Shanghai Composite index took no notice of the invasion, rising three per cent to close the month at 3,462. Similarly, the South Korean index was up, gaining one per cent to 2,699. Japan’s Nikkei Dow followed the general trend by falling two per cent to 26,527, while the market in Hong Kong was down five per cent to close the month at 22,713.

Emerging Markets

As Russia launched its invasion of Ukraine, the Moscow stock market dropped dramatically in the face of the likely sanctions. Having ended January at 3,530, the index closed Friday, February 25th, at 2,470, down thirty per cent on January 31st.

The rouble also fell sharply against all major currencies, with the Bank of Russia more than doubling the interest rate from 9.5 per cent to 20 per cent in a bid to support the country.

Elsewhere in Emerging Markets, it was once again a story of digital currencies, with India’s finance minister announcing that the country will launch a digital version of the rupee as early as this year. As we have mentioned above, China is already trialling the digital yuan.

Meanwhile, India’s unemployment rate fell to 6.57 per cent in January, and it remains higher than other emerging economies. The country is now aiming to create six million jobs over the next five years, as it battles the problem of the so-called nowhere generation of young people.

Inevitably, the month ended with more fallout from the invasion. It was reported that India was exploring a way to set up a payment mechanism with Russia to soften the knock-on effect of any Western sanctions. In particular, the Government is concerned that supplies of fertiliser could be disrupted by sanctions, threatening India’s enormous farming sector.

The Indian stock market ended the month down three per cent at 56,247. In Brazil, where President Jair Bolsonaro, declined to condemn Russia’s invasion of Ukraine, the market was up by one per cent, to end the month at 113,142.