Events around the Russia-Ukraine conflict have been developing at a rapid pace over the past few days, and a meeting between Ukrainian President Vladimir Zelensky and Russian President Vladimir Putin is possible in the next two weeks. Askar Akhmedov, Investment Director at ATLAS Capital, wrote for Oninvest how investors should react to everything that is happening.

Last week, on August 15, U.S. President Donald Trump met with Russian President Vladimir Putin in Anchorage. They discussed the possibility of ending the war in Ukraine. Trump gave the meeting itself a "10 out of 10" rating, though he admitted, "No deal."

Already on Monday, August 18, Trump hosted a representative delegation in Washington. Ukrainian President Vladimir Zelensky, British Prime Minister Keir Starmer and Italian Prime Minister George Meloni, French President Emmanuel Macron, European Commission head Ursula von der Leyen, German Chancellor Friedrich Merz, Finnish President Alexander Stubb and NATO Secretary General Mark Rutte came to the White House for the talks.

The talks lasted a total of more than six hours. After the talks, the FT newspaper wrote that Ukraine had offered to buy $100bn worth of US weapons. Trump, in turn, said that he would provide security guarantees to Ukraine.According to him, they will be provided by European countries "in coordination with the USA".

Now the U.S. administration has moved on to preparations for a face-to-face meeting between Putin and Zelensky, the very possibility of which was hard to believe even last week. U.S. Secretary of State Marko Rubio announced the preparations on Fox News. German Chancellor Friedrich Merz said that the meeting could take place within the next two weeks. Among the possible venues are Geneva, Rome or Budapest.

The question arises - how will the markets react to all these events? And what should investors do?

It is important to know that geopolitical events, particularly armed conflicts, are often counter-intuitive in the markets. Indices decline as fears of war increase, but the very start of hostilities is usually the "bottom" from which the market recovers - as cynical as that sounds.

On the other hand, the end of hostilities may have no effect on stock markets at all, at least on the short-term horizon, as the market rises as the likelihood of a truce increases, not because of it.

What are we seeing today? A decline in European defense stocks. Although in the first half of this year they, as well as defense indices, were growing. Investors were betting that Europe would more actively develop this sector amid the escalation of the war and after the cooling of relations with the U.S. within NATO.

In case of peace between Russia and Ukraine in the long term, investors should pay attention to two possibilities: recovery of Ukraine's economy and lifting of sanctions on Russia (including those related to oil supplies).

But you need to know the limits of your expertise. For example, the lifting of sanctions, if it happens, will probably be gradual and without an international team of compliance controllers and lawyers it is possible to make unforgivable mistakes. On the other hand, having such a team allowed some investors and financial institutions to make a lot of money and grow in 2022.

This article was AI-translated and verified by a human editor

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