Analysts have mixed views on the impact of the Russia-Ukraine conflict on ASEAN economies and currencies.

CGS-CIMB said ASEAN nations, in particular, Malaysia, Singapore, Indonesia and Thailand, seemed to have experienced limited impact during times of global conflict.

“We notice negative impact on stock prices at the onset of the crisis, but no significant implications on the stock market in the longer run,” the brokerage said in a note.

As for currencies, it said the US Dollar Index mostly fell during a crisis, which meant regional currencies tended to gain.

“However, this varied depending on the type of conflict and the country. In addition, some currency appreciations were also short-lived,” it added.

On the US interest rate, CGS-CIMB said concerns over high inflation coupled with the country’s current economic strength may lead the US Federal Reserve to maintain its hawkish tone.

Meanwhile, PublicInvest Research said a full-blown Russia-Ukraine conflict could hurt the economies of emerging markets (EMs) given expected volatilities and further spike in oil prices.

“Jittery sentiment could push investors to seek a flight to safety – an upside bias for safe haven assets, particularly the US dollar,” the research house said.

The bank said the bias towards safe haven assets, especially the greenback, is expected to be at the expense of ASEAN currencies.

“Limited interest rate differential with the US is of particular concern,” it added.

PublicInvest Research said the sharp rise in global crude oil prices, with the benchmark Brent crude that is close to US$100 per barrel will also have negative ramifications on net oil importing countries, including India — the fastest growing economy in the EMs.

“This, by extension, may weigh on sentiment for the entire emerging market bloc,” it said.

The research house noted that the crisis could also hurt the global economic recovery by adding to inflationary pressures which are already hobbled by supply shortages and disruptions post COVID-19.

Source: NAM News Network