Four points on Russia’s market sell-off

The sell-off in Russia’s financial markets in response to the reassessment of the likelihood of conflict with Ukraine has pushed up the risk premium on Russian assets to a similar level to that which followed the annexation of Crimea in 2014. There is scope for a rebound if tensions ease. But there is a clear risk of a more serious outcome than in 2014, which could push Russia’s risk premium up significantly further. In view of the wider interest, we are also sending this Emerging Europe Economics Update to clients of our Global Markets Service.