In Tharman’s “perfect long storm”, these are the structural shifts to look out for

By Beansprout • 10 Mar 2022 • 0 min read

Singapore’s Senior Minister Tharman Shanmugaratnam spoke about “a new of vulnerability ” post the Ukraine Crisis. We examine some of the structural shifts driving this complex world we live in.

In Tharman’s “perfect long storm”, these are the structural shifts to look out for
In this article


  • Singapore’s Senior Minister Tharman Shanmugaratnam shared that “structural shifts” from the Ukraine Crisis has led to a “new era of fragility”.
  • In our view, some of these structural shifts may include a greater focus on climate change and energy security.
  • We are also seeing an acceleration in deglobalisation, as well as questions raised about the US Dollar’s dominance and the role of cryptocurrencies in the global financial system.
  • These could be interesting long-term themes for investors looking at opportunities in the market. For example, investors can get exposure to global clean energy through the iShares Global Clean Energy ETF (ICLN) and the Invesco Solar ETF (TAN).

What happened?

It isn’t often that Singapore’s Senior Minister Tharman Shanmugaratnam comes out to say something. But when he does, we can be sure that there will always be words of wisdom to learn from.

Tharman, who is also the Chairman of the Monetary Authority of Singapore (MAS), famously said that Singapore should provide trampolines rather than social safety nets to allow those who are slipping through to bounce back stronger. He has also ruled himself out as Singapore’s next prime minister.  

Amidst the Ukraine crisis, Tharman spoke at the IMAS-Bloomberg Investment Conference 2022 on March 9. During the session, he talked about the “perfect long storm” of Ukraine crisis, Omicron, and stagflation.

More importantly, he shared that these are not cyclical shifts but “structural shifts” which will make for a “new era of fragility”. This has made “investing for the future a much more complex game. It’s more complex than it was pre-pandemic. But it’s also more complex than it was two weeks ago.”


Source: Bloomberg

What are some of the structural changes we could face?

While it might still be too early to understand how the Ukraine Crisis will turn out, there are already signs of significant changes which could impact the global economy in the years ahead. Based on our assessment, some of these would include:

#1 Greater focus on climate change and energy security

In the near-term, this will likely lead to investments in liquefied natural gas (LNG) terminals and perhaps also restarting of nuclear power plants to diversify away from Russian gas.

Over the medium term, countries could further accelerate plans to move towards renewable energy. For example, Germany has announced plans to speed up the pace of its transition to renewable energy. By targeting to become a net renewable country by 2035, Germany is effectively bringing forward its renewable targets by 15 years.

As part of the EU’s plans to make Europe independent from Russian fossil fuels well before 2030, there are plans to diversify gas supplies via higher LNG and pipeline imports from non-Russian suppliers, and reducing faster the use of fossil fuels and increasing renewables.

#2 An acceleration of deglobalisation

We have already signs of deglobalisation with the US-China trade war earlier, which led to development of technology and supply chains along two separate tracks.

While the Russia-Ukraine war has indirectly brought NATO closer together, it has also brought about significant divisions both within and across countries.

The longer-term impact could be to accelerate the deglobalisation trend in place post the global financial crisis. And this could happen in both the physical and digital spaces.

#3 Will the US Dollar stay dominant?

One of the most significant sanctions imposed by the West on Russia was a ban of selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) global payment messaging system, as well as restrictions imposed on the Russian Central Bank.

These sanctions have effectively made the Russian central bank’s US Dollar foreign exchange reserves inaccessible and worthless through unilateral actions.

Central banks around the world, especially China’s, could view this development with substantial concern and seek to diversify their reserves further away from the US Dollar.

#4 Crypto adoption could increase further (and also the regulatory response)

The sanctions and domestic capital controls have resulted in a surge in usage of crypto, both as a way to circumvent controls while maintaining a store of value, and also as a way to easily raise funds and donations. The Ukraine government raised more than US$42 million in cryptocurrency in less than six days, reflecting the success of the crowdfunding exercise.

Regulators are also taking notice, especially with respect to sanctioned individuals. In a testimony to the US congress, Federal Resevere Chairman Jerome Powell said that the Ukraine Crisis has highlighted the need for US Congress to take “action on digital finance including cryptocurrencies.”

Whether this ultimately results in crypto becoming more mainstream and perceived as a “responsible” player remains to be seen.

What would Beansprout do?

  • In our previous article “What does the Ukraine crisis mean for markets?”, we highlighted that markets tend to shrug off geopolitical tensions and recover in the longer term, as long as there is no major knock-on impact that could tip the global economy into a recession. Despite the near term volatility, there could also be opportunities for investors taking a longer-term view of the market.  
  • In thinking about the long term investment themes,  we can think about the structural shifts that could be catalysed from the Ukraine Crisis.
  • For investors interested in clean energy, examples of ETFs that offer exposure to global clean energy would include the iShares Global Clean Energy ETF (ICLN) and the Invesco Solar ETF (TAN). For investors interested in the growth of blockchain technology, an ETF that offers exposure to blockchain would be the Amplify Transformational Data Sharing ETF (BLOK), which has Nvidia and Coinbase as its top holdings.

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