The Russian invasion of Ukraine
On 24 February Russia launched a military invasion of Ukraine. This has led to very strong international reactions and heavy sanctions have been imposed on Russia. In consequence, business ties between Russia and Europe/the USA have been severely weakened. This has led to very high commodity prices, as Russia and Ukraine are important suppliers of commodities such as grain, oil and gas and ammonia (fertilizer). If the conflict persists, the global flow of goods will be considerably disrupted. In addition to the global economy being heavily impacted, global security is being threatened in a way we have not seen for many decades. Norfund’s investments are not directly affected by the conflict, but Norfund invests in many countries that are particularly vulnerable to the effects of the war in Ukraine. This is due to factors such as substantially elevated food prices, risk of food shortages in countries with large import needs, increased prices for oil, gas and fertiliser and hence a danger of increased political turbulence. As a consequence of this situation, the risk premium for investing in emerging markets will also increase.