Those impacts were cited across institutional investors' 2022 returns commentaries, with the war in Ukraine cited by many as a key reason for negative returns for the calendar year.
The MSCI ACWI lost 18.4% in 2022 vs. a gain of 18.5% in 2021. However, sources said markets have partially recovered — and Marcus Poppe, co-head of European equities at DWS Group, said in a Thursday commentary that the war is no longer playing a role in stock markets.
But he warned that a "Russian spring offensive could quickly create a new situation" — a risk premium that is not yet priced in.
Mr. Poppe added that while the war may no longer be driving market performance, it has left scars on eurozone economies to the tune of 1 percentage point of growth in both 2022 and 2023. Russia, he said, can expect a GDP loss of almost 7 percentage points in growth across 2022 and 2023. He also warned that investors should not assume that a recent equity rally "will continue in the same form," since inflation and interest rates are likely to remain high, and corporate profits and valuations appear to be largely exhausted.
As such, he said investors with a long-term horizon should not be put off, but should pay a little more attention to balance sheet quality in view of the higher interest rates expected in the near future.
MSCI research executives said in a separate commentary, "Global Markets One Year After Russia's Invasion of Ukraine," published on Tuesday, that markets have partially recovered, but added that important uncertainties remain.
Executive Directors Ashish Lodh and Tom Leahy, along with Managing Director Andy Sparks, also head of portfolio management research, and Vice President Elchin Mammadov, wrote in the commentary that inflation, economic growth and the effectiveness of monetary policy will broadly drive markets, alongside many fundamental drivers.