The Ukraine crisis could affect institutional investors' asset allocations, especially regarding fixed income, equities and private equity, said Charles Dallara, executive vice chairman of the board and partner, chairman of the Americas, of money manager Partners Group.
Mr. Dallara was the keynote speaker at The Pension Bridge Private Equity Exclusive conference in Chicago on July 20.
The crisis, which intensified with the downing of Malaysia Airlines Flight 17 last week, could not only disrupt Russia's deteriorating economy but also its oil and gas market, affecting global energy markets and the fragile economic recoveries of a number of countries, including most of the countries in Western Europe, the United States and Japan, he said during the speech and in an interview.
Europe depends on Russia for 30% of its gas and almost that much of its oil, said Mr. Dallara, who was managing director and CEO of the Institute of International Finance before joining Partners Group about 18 month ago. He was also the lead negotiator for private creditors in the Greece sovereign debt crisis in 2011.
This could hurt debt markets as well as negatively affect equity markets, he said. It also has an impact on private equity managers, who cannot rely on market dynamics to make returns but have to be prepared for a world where it is up to them to increase the value of their portfolio companies, he said in the interview.
“We look at the markets today and ask where can an investor hide, and there's not enough mattresses out there,” Mr. Dallara said.
