Tags: El-Erian | Ukraine | stocks | geopolitical

El-Erian: 5 Steps That Must Be Taken to End Ukraine's Impact on Global Stocks

By    |   Monday, 31 March 2014 01:26 PM

Five conditions must be met related to Ukraine so that the country's turmoil stops acting as a weight on global stock markets, says Mohamed El-Erian, former CEO of Pimco.

1. "Russia needs to refrain from any additional provocations, threats and, certainly, territorial incursions," he writes in a blog for Yahoo Finance.

2. Ukraine needs tens of billions of dollars in emergency aid within weeks. Without such aid, Ukraine risks an output collapse and hyperinflation, El-Erian says.

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3. Ukraine needs to implement "a meaningful set of structural reforms to reverse what has been a pronounced period of economic underperformance."

4. Ukraine's government needs to gain the support of its citizens for economic, political and social reform.

5. "The global economy would need to develop much better structures and mechanisms to deal with geopolitical crises," El-Erian writes.

Those are difficult requirements, he acknowledges. "And the market consequences go beyond the Ukrainian overhang," El-Erian explains. "They also speak to the challenge markets face in better modeling and pricing geopolitical risk."

Christopher Ailman, chief investment officer of the California State Teachers' Retirement System, tells Pensions & Investments that he and his colleagues watch closely for geopolitical risks as they make their investments.

"The markets are more interlinked now than they were in the 1980s," Ailman notes. "It's a tougher job than it was 30 years ago, because it's a more dynamic global marketplace. 'Difficult to price' is part of investing in the global market."

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Five conditions must be met related to Ukraine so that the country's turmoil stops acting as a weight on global stock markets, says Mohamed El-Erian, former CEO of Pimco.
El-Erian,Ukraine,stocks,geopolitical
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2014-26-31
Monday, 31 March 2014 01:26 PM
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