Investing in the shadow of the war: This is how we were saved thanks to crypto

Our virtual investment basket, which took a hit in the first two months of the year, has risen again thanks to the progress of talks between Russia and Ukraine and the rise in cryptocurrencies and US interest rates, which means we have recovered half of the previous two months' loss.

Roast Greenberg

30/03/2022

Wednesday, 30 March 2022, 17:09 Updated: Thursday, 31 March 2022, 09:00

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The progress of negotiations to reach an agreement to end the war between Ukraine and Russia has led to a sigh of relief in the Western capital markets, with the return of confessions to European and US stock exchanges, which have since responded with price increases

. By 6.3% during March (until the 29th of the month - see table), along with the S&P 500 index rose by 5.35% for the same period.

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The losses were cut in half - the markets and we returned to business (Photo: Walla !, no)

Uri Greenfeld, the chief strategist of Psagot Investment House

, explained to Walla!

Money and Maariv Business, because "the various reports on the progress of talks between Ukraine and Russia, and the convergence of investors' expectations for a non-extreme scenario, have led the latter to take advantage of the first two months of the year to return to the capital market

. "Despite this, it should be noted that the war in Russia is still ongoing."

The moderation in the rise in oil and commodity prices towards the end of the month also managed to lower the fear gauge

, and Greenfeld notes that "investors feared a global energy crisis as a result of the rise in oil prices."

As of the date reviewed by Walla!

Money and Maariv Business.

However, not all stock markets rose in the period described, and it is worth noting the Chinese stock market, which suffered sharp declines during March, mainly due to the Chinese government's policy of dealing with the corona plague that continues to be severe. Led to closures and hurt economic activity in the country. "The

Chinese Shanghai Composite Index fell 7.46% for the period we examined in the yield chart, leading the declines in our investment map as the only negative stock index during the month.

While the trend in international stock markets was mixed International Government Bonds - the trend was very negative.

Uri Greenfeld, Chief Strategist of Psagot Investment House (Photo: Rami Zranger)

"Rising inflation has led central banks around the world to raise interest rates or signal imminent rises," Greenfeld says, "leading to a sharp rise in yields. The US Federal Reserve raised interest rates during March, as expected, and signaled that it will continue to raise interest rates in the near future. At a faster rate than previously thought.

Estimates in Israel are that the interest rate will also rise, and have strengthened following relatively hawkish statements by the Governor of the Bank of Israel and his deputy.

Accordingly, it seems that in the coming months investors will have to get used to a completely different interest rate environment than in recent years, so despite the relative calm in March, it is difficult to say that market volatility is behind us.

However, the first signs of an economic slowdown as a result of high inflation have already begun to appear in various figures, especially in the US, so the rate hike may be sharp but also shorter than expected, so in the medium to long term market pressures are expected to ease.

"The jump in US interest rates strengthened the dollar against the shekel, but in the days leading up to the yield test it weakened, and the euro was also weaker against the shekel, amid estimates that local interest rates will rise before interest rates in the eurozone."

The dollar and the euro experienced first declines against the shekel this year, falling 0.4% and 1.49% respectively, with January being the only gains experienced in our investment portfolio.

The virtual currencies, however, continued the upward trend they began to experience in February, and were the largest addition to our investment portfolio return, with an increase of 9.43% in Bitcoin currency for the period under review, and 16.45% in Etherium currency, which together added about 64% of NIS 544 That we earned during the month of March.

The rise experienced by the Bitcoin currency in the third month of the year returned the profitability of our investment in it, but in contrast, the sharp rise experienced by the Ethereum currency failed to cover its sharp declines in previous months, summing up the largest loss in our investment portfolio so far. 80% of the loss.

"Bitcoin rose in the second half of March in high correlation with stock markets," Greenfeld describes, "and this is an interesting point, as in recent months some have thought that cryptocurrencies hedge risk in stock markets, and this thinking is probably wrong, as correlation between these markets is high."

Despite the sharp increases in most of our investment channels, the total portfolio still bears a loss, which was reduced to NIS 655, compared with a NIS 1257.2 loss that the portfolio carried until the end of last February.

Investors, like the rest of humanity, hope that the talks between Ukraine and Russia will bear the fruits of the end of the war and the full return of certainty to the markets, and pray for a halt to the landing of black swans in the global economy lake.

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• The Tel Aviv Stock Exchange

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