Russia warned of shock scenarios for the financial market – Rosbalt

Stock market shock scenarios are hard to predict and more like conspiracy theories, but several such scenarios can be modeled. Artem Tuzov, executive director of the capital market department of IC “Univer Capital”, told PRIME agency about this.

In his opinion, first of all, this is high inflation with a drop in world GDP. “This scenario assumes that against the background of the energy crisis, prices for energy resources will remain at a high level for a long time, which will dramatically affect the growth of the cost of goods and services,” the expert explained.

In this case, according to him, producers will suffer losses, raise prices and simultaneously lay off staff. As a result, the purchasing power of the population will decrease amid high inflation. Central banks due to high world inflation, according to the expert, will have to raise the refinancing rate, which will entail a contraction of the leverage in the world economy, a collapse of stock markets and a fall in GDP.

“The world could slide into an inflationary spiral when the actions of regulators only worsen the situation,” Tuzov warned.

The second hypothetical shock scenario is to assume the possibility of a crisis in industry defaults against the backdrop of changes in consumer demand.

And finally, the third shock scenario is the continuation of the COVID-19 pandemic. “The waves of the pandemic continue, part of the world economy has been suffering from lockdowns for the second year already. The debt burden of corporations is growing. Emergency measures to inject money into the economy and subsidies to the affected industries were able to push many companies away from bankruptcy, ”the expert said.

However, he believes that the change in consumer sentiment may not allow them to get out of the crisis. Shoppers simply won’t return to malls, hotels and restaurants. Their services will replace food delivery systems, groceries and new forms of recreation. As a result, towards the end of the fiscal year, that is, by the spring of 2022, many companies will be forced to file for bankruptcy and closure.