The Tantallon India Fund closed 6.68% lower in February, with significant market volatility and selldown in risk assets over the last fortnight, due to Putin’s invasion of Ukraine and the spike in energy prices.
• We were blindsided by Putin. As with Covid, given unprecedented uncertainty, we are comfortable with our decision to raise significant cash in our portfolios until we can better assess the second- and third-derivative fallout from Putin’s war. Two weeks into the war, it is fair to say that Putin miscalculated on multiple fronts but most significantly on the Ukrainians not being intimidated by the Russians and Biden being able to rally coherent global sanctions on Russia, its supposedly sanction-proof reserves, and on Putin’s inner circle while finding ways to provide military and tactical support for the besieged Ukrainians.
• Denied a “quick, decisive victory at minimal cost” with sanctions starting to bite and an increasingly demoralised military complex, Putin might be encouraged to seek face-saving ceasefire terms. Given where we are, and the stark alternative couched in significant further loss of life, that would be a good outcome. However, based upon what we currently “know”, it is difficult to project a speedy de-escalation or give a specific timeline. We intend to remain patient.
