Key points
- Companies operating in Russia, like Polymetal International, are up massively since 7 March 2022
- Both my IAG and boohoo shares have increased since I bought them last week, by 17.2% and 34.78%, respectively
- Both Ukraine and Russia are now engaged in serious discussions for ceasing military conflict
Over the past few weeks, I have watched the sustained selling of the vast majority of stocks. The only exceptions were precious metals, oil, and aerospace and defence companies. The primary reason for this downward price movement has been the military escalation between Russia and Ukraine. With both sides now at the negotiating table, however, is a stock market recovery in progress? Let’s take a closer look.
Is a stock market recovery happening right now?
During this sell-off, I’ve consistently used companies with Russian links to determine the impact of the recent military action and sanctions. Firms like Polymetal International, a Russian gold mining business, and Ferrexpo, an iron ore miner based in Ukraine, have seen their share prices collapse.
Over the past year, Polymetal has fallen 89% and Ferrexpo is down 58%. They both currently trade at 165p and 150p, respectively.
However, since last Tuesday, 7 March 2022, the share prices of each of these businesses are up 63% and 25%. This may suggest that there is optimism in the market that the worst of the hostilities is over.
It could also mean that investors now think that these companies are oversold. One way or another, it supports my view that during turbulent times, it is usually better to buy instead of sell. I discussed this view last week.
How my own purchases have performed
I stated on 7 March 2022 that I was planning to buy more shares in International Consolidated Airlines Group and boohoo Group. Shares in each business are down 37% and 72% over the past year. Since I bought more last week, the share prices are up 17.2% and 34.78%, respectively. These firms currently trade at 136p and 92.5p at the time of writing. By buying shares in these companies when others were selling, I lowered my overall average price per share.
Furthermore, recent events appear to show that there may be a ceasefire in the near future. High profile officials from both Ukraine and Russia have met on a number of occasions to discuss how military action may stop and a ceasefire be achieved.
Ukrainian President Zelensky has also said that the Russians were “no longer making ultimatums, but are listening carefully to our proposals”. For the sake of innocent civilians, I hope that talks result in something constructive. It is also likely that Russia is starting to feel the impact of Western sanctions.
This may allow talks to proceed more quickly. It is also possible, however, that talks could break down and conflict will continue. This may extend the recent market sell-off.
I’m responding to this latest upward price action by sticking to my principles of finding long-term growth stocks. When others panicked, I saw a good buying opportunity and I will continue to buy quality companies during any future market dips. If the current market action continues, however, I think a stock market recovery may be near.