The rapidly evolving situation in Ukraine has left many investors feeling anxious for many reasons. Although this crisis has shaken global financial markets, history tells us that markets tend to rebound from such events over time. Current events and the resulting volatility can be unnerving in the short term. However, it reminds investors of the importance of maintaining a long-term view, and of portfolio diversification in spreading out the potential for risk across multiple industries, regions, and even company sizes.
 

The economic implications of the Ukraine crisis are still uncertain, but we do know that crisis-related sanctions will negatively affect international trade. That's likely to be small, considering that Russia contributes to less than two percent of the global economy and is not very well integrated with the global economy. The indirect effect is likely to be the impact from higher commodity prices, including energy and food. Russia is a major producer and exporter of many commodities. So that's going to have a negative impact on growth and inflation, and it could affect the spending plans of corporations and individuals.
 

In face of the uncertainty, resisting the urge to do something is often better than reacting to daily events that can change rapidly.
 

The prospects for Canadian assets are relatively favourable in this environment. Canada is very far away from this whole situation. Exposure to Russia is very low. As an exporter of commodities, Canada’s trade balance will benefit from higher commodity prices. Canada’s equity market has a favourable composition, with high-dividend-paying stocks, energy stocks and commodity stocks. Canadian government bonds are of highest quality and can be attractive to foreign investors in this type of environment. In addition, the Canadian dollar is somewhat undervalued and supported, to a certain degree, by higher commodity prices.
 

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