The situation between Russia and Ukraine sends a heavy signal.
Ukrainian President Zelensky's attitude has suddenly undergone a significant change. In an interview with the BBC, he acknowledged the possibility of peace negotiations with Russian representatives, including Russian President Putin. The Russian side has responded positively to this.
Zelensky's significant transformation is attracting international attention. According to analysis, the main reason for Zelensky's change in attitude is that the Ukrainian military is facing difficulties in the frontline battle, Western aid to Ukraine is becoming increasingly fatigued, and the prospects for the US presidential election are being affected. Currently, the pressure on the Ukrainian army on the front line is increasing day by day. On July 22nd local time, Ukrainian Armed Forces Commander in Chief Sersky stated on social media that the Russian military is actually carrying out active offensives of varying intensities on the entire front line.
It is worth mentioning that during the Russia-Ukraine conflict, both the Russian economy and the stock market remained very resilient. Judging from the increase and decrease in the past two years, the Russian MOEX index ranks first in the European stock market. As of June 20, 2024, the Russian MOEX index has returned to the level before the Russia-Ukraine conflict, up 1% from the closing price on February 23, 2022.
The Russia Ukraine Incident
On July 23, the reference news quoted Deutsche Presse-Agentur as reporting that Russia responded positively to the remarks of Ukrainian President Zelensky on July 22. Zelensky had previously said that consultations might be held to end the conflict between the two countries.
According to the report, Kremlin spokesman Peskov said, "This is better than ruling out the possibility of contact with Russia and the Russian head of state. Of course, discussing dialogue in one tone or another is much better than discussing the intention of the Ukrainian war to the last person
According to TASS on the 21st, Zelensky acknowledged the possibility of peace talks with Russian representatives, including Russian President Putin, in an interview with the British Broadcasting Corporation (BBC).
If a plan is formulated at the second peace summit and Russia is willing to discuss it, then we will be willing to negotiate with Russian representatives with our partners. As for whether the other party is Putin or not, what difference does it make? "Zelensky also said," If we want to end the war and we have all the power to end it, if the world is united around Ukraine, then we will talk to those who decide everything in Russia. "According to reports, Zelensky had previously stated that Russian representatives should attend the second peace summit in Ukraine.
Peskov said that Zelensky talked about the possibility of negotiating with Moscow, which is better than refusing negotiations. But as for the meaning behind Zelensky's remarks, the specific "plan" referred to, and what measures will be taken in that direction, the Russian side is currently unable to make a judgment and needs to wait for some concrete actions.
Significant transformation
Zelensky's significant transformation is attracting international attention.
According to the Global Times citing Radio France Internationale on the 22nd, Zelensky seems to have acknowledged the idea of direct dialogue, overturning some of the prerequisites he had previously set, such as the withdrawal of Russian troops from Ukrainian territory.
According to the analysis of the report, the main reason for Zelensky's change in attitude is that the Ukrainian military is facing difficulties in the frontline battle, the fatigue of Western aid to Ukraine is intensifying, and the impact on the prospects of the US election is also a factor.
According to an analysis by the Ukrainian news website "strana. ua", amidst Biden's withdrawal and favorable trends in Trump's election, Zelensky is actively seeking new ways to resolve the conflict. If Trump wins the election, US support for Ukraine may sharply decrease, or even completely suspend aid to Ukraine.
According to reports, due to the pressure of the war and the impact of the US presidential election, Zelensky did not give a definite answer in recent media interviews on whether Ukraine insists on recovering all its territories, indicating that there may be room for negotiation on this issue. Zelensky seems to have hinted that Ukraine does not intend to fight for the recovery of all its territories.
Currently, the pressure on the Ukrainian army on the front line is increasing day by day. On July 22nd local time, Ukrainian Armed Forces Commander in Chief Sersky stated on social media that the Russian military is actually carrying out active offensives of varying intensities on the entire front line. In the Donetsk region, the Russian army continues to launch a fierce attack towards the direction of Pokrovsk. Intense battles are underway in places such as Krasnohorivka and Chasovyar. In addition, the Russian army did not give up its plan to capture areas such as Stelmahovka and Makevka, and attempted to seize the alluvial plain islands on the left bank of the Dnieper River.
On the 22nd, the Russian Ministry of Defense announced that the Russian military will continue to improve the situation in Kharkiv, Donetsk, Kherson and other directions, and repel the Ukrainian army, controlling more favorable attack routes and positions.
On the 22nd, the Russian news website "tsargrad. tv" believed that Zelensky was trying to prepare in advance for Ukraine's position on resolving future conflicts and leaving room for maneuver. In addition, the overwhelming advantage of the Russian military on the battlefield has made the prospects for Ukrainian military operations even more bleak, which has forced the Ukrainian authorities to consider sending signals through various forms of direct or indirect negotiations with Russia.
Russia's confidence
Since the Russia-Ukraine conflict, Russia has undergone profound changes in economic, social and other fields. Despite facing severe sanctions from the West, the Russian economy and stock market remain resilient.
In terms of economy, from the second quarter of 2023 to the first quarter of 2024, the Russian economy maintained growth for four consecutive quarters, with year-on-year real GDP growth rates of 5.1%, 5.7%, 4.9%, and 5.4% respectively.
According to the IMF's forecast, Russia's actual GDP growth rate is expected to reach 3.2% in 2024 (3.6% in 2023), which is higher than the growth rate of major developed economies in Europe and America for two consecutive years. In addition, the Russian manufacturing PMI recorded 54.9 in June 2024, reaching the boom bust line level for 26 consecutive months.
At the same time, the representative index of the Russian stock market, the MOEX index (denominated in rubles), has rebounded significantly since October 2022, and its rise and fall performance in the past two years is among the top in European stock markets.
According to the research report data released by Huafu Securities, on February 24, 2022, the Russia-Ukraine conflict broke out, and the circuit breaker was triggered by the sharp fall of 45% in the Russian MOEX index, which set a new record for the largest decline in the day, and finally closed down 33%; On the second day, Russia urgently announced a suspension of trading and continued to take actions to stabilize the financial market; After being closed for nearly a month, the Moscow Stock Exchange in Russia resumed trading for 33 stocks on March 24th, but short selling was still prohibited. After opening, the Russian stock market quickly stabilized and began to rebound. As of June 20, 2024, the Russian MOEX index has returned to the level before the Russia-Ukraine conflict, up 1% from the closing price on February 23, 2022.
The industry index performance during this period, from high to low, is as follows: transportation (+72%), information technology (+29%), consumer goods (+26%), real estate (+22%), telecommunications (+20%), finance (+19%), utilities (+16%), chemical industry (+12%), oil and gas (+9%), and raw materials (-25%). Most industries except for raw materials have achieved an increase.
Based on the fluctuations in the stock market over the past two years, the Russian MOEX index has performed among the best in the European stock market. The performance of Russia's MOEX index lags behind Italy's FTSE MIB, Germany's DAX, Spain's IBEX35, and the Netherlands' AEX index, but leads representative indices such as the UK's FTSE 100, France's CAC40, and Europe's STOXX600.
Huafu Securities believes that in the context of comprehensive sanctions imposed by Western countries on Russia, the reasons for the resilience of the Russian economy and stock market include: diversification of energy export markets, implementation of import substitution to encourage local production, reduction of dependence on the Western financial system, stabilization of financial markets through monetary policy and capital controls, and adjustment of economic structure to promote manufacturing development. Among them, the strong investment activities and the increase in government spending play a key supporting role in economic growth.