, Singapore

See how the Crimean crisis could hit Singapore firms

Spike in oil price feared.

According to DBS, equity markets reacted to Russia’s decision to send its troops into Ukraine’s Crimea region. But losses quickly recovered after Putin said he’s not considering taking control of the Black Sea region of Crimea and would send troops into Ukraine only in extreme circumstances.

The respite could be temporary and the geopolitical uncertainty is expected to be drawn out.

DBS notes that fortunately, Ukraine’s GDP is only 70% of Greece’s and its impact on the global economy is minor. Singapore listed companies under DBS' coverage have no direct business exposure to the country. DBS remains watchful but will not turn cautious on equities because of the present situation in Crimea.

Here's more:

The risk is a spike in oil price and its impact on the already weak global recovery should the situation take a turn for the worse. Russia supplies about 25% of Europe's gas needs, and half of that is pumped via pipelines running through Ukraine.

A jump in oil price in the event of a worsening Crimean situation will impact investors’ sentiment, weighing down more on transportation companies while underpinning the O&M sector and yards.

 

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