Silenced Cannons in Ukraine


The cannons on the Ukrainian steppes are finally falling silent and the Ukraine crisis has fallen out of the news. The gradual improvement in relations signals several investment opportunities.

While there used to be dozens of lives lost in war acts in Ukraine every day, now mostly sporadic skirmishes happen.

Dovre recently met with officials of the Ministry of Foreign Affairs in countries who are close to the negotiations between the West and Russia about Ukraine. Their moods were positive and according to them the negotiations are gaining momentum.

If this continues, the sanction war might already be finished next spring. This could create several investment opportunities.

Increased willingness to negotiate

The positions have relented both on the Russian and Western side. On the Western side, particularly France, Italy, Greece and Hungary are looking for a quick normalization of the relationship with Russia, while the United States, Poland, Baltics and Ukraine are holding back.

The danger of a split in the EU will increase if sanctions are kept for a long time. As a result, the Western side has been more willing to bargain. Similarly, a weak economy has made Putin to adopt a softer tone. 

The war in Syria, the fight against terrorism and the refugee crisis has also softened tempers. No politician likes to fight wars on several fronts simultaneously.

Towards the compromise

Right now the winds are blowing in the direction of a big compromise. The West is willing to repeal the heavy sector sanctions if the Minsk Agreement is fulfilled.

The Western powers will still signal their dissatisfaction with the Crimean annexation through maintaining sanctions against individuals who played a particularly important role in the takeover. However, the remaining Crimean-related sanctions will only be of symbolic nature and have minimal economic impact.

Even though Crimea remains in Russian hands, the West is willing to call off all important sanctions, and in return Putin has to accept that the rebel regions of Eastern Ukraine will get their supply lines cut.

The most critical remaining point of the Minsk Agreement is that Kiev should reclaim control over the border with Russia by January 31st.

Internal threats

There is still much that can go wrong, and the greatest threat to a peaceful solution is internal. The Ukrainian government is challenged by extreme nationalists, while many in the rebel regions are not keen on coming back under the control of the central government. 

After 8000 killed, there are many wounds on both sides that will take a long time to heal.

The rebel regions were going to hold elections this fall that would have been illegal under the Minsk Agreement. However, they were called off, probably after the pressure from Moscow. Similarly, the West is pressuring the central government in Kiev to comply with its treaty obligations.

Gains of peace

If the sanctions are repealed it will be good news for the Moscow stock exchange. The sanctions and the oil price collapse have caused a bear market.

Polish and Baltic stocks may also rally. The tense geopolitical situation has caused an investor flight, and Polish shares are currently traded at only 1.15 times the last reported book value of equity, despite a robust economy.

The fish farming sector on the Oslo Børs will benefit from a sanctions relief. Some offshore companies that got their Russian contracts frozen because of the sanctions may also be worth taking a look at.


  • RCL
  • Panoro Energy
  • Veidekke
  • Tomra
  • Marine Harvest
  • Det norske oljeselskap

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