Already weakened by inflationary pressures, share markets across major countries have tumbled as Russia declared war on Ukraine. Global markets will recover; however, Russian investors – especially the mass affluent – are set to feel the pain for years to come.

The Russian ruble plunged to its lowest since early 2016. The country’s benchmark MOEX Index closed 33% lower following the invasion of Ukraine, wiping out billions of retail wealth. The hardest hit will be those with the highest exposure to equities and other financial products – the mass affluent.

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According to GlobalData’s Investor Insights: Investment Drivers Analytics, only 7% of retail investors held equities in 2021, compared to 29% among the mass affluent.

Traditionally, those in higher wealth bands tend to weather crises more robustly. While higher investment product holdings expose them to greater volatility, it also means they are better positioned to capitalize on an eventual market rebound, as seen during the 2008 financial crisis and the pandemic.

The same will hold true again for investors outside of Russia. Markets will bounce back, and investors will recoup their losses. However, this is unlikely to occur in Russia. Newly imposed sanctions will ban Russia from accessing global markets, attracting investments, and processing payments through the US financial system. The recovery will be long and slow, unlike previous crises.

High deposit holdings have sheltered those in lower wealth bands. But the collapse in the value of the ruble will hurt, hitting mass affluent individuals hard. The latter hold a notable 37% of wealth in equities or fund products. In contrast, they hold 49% in deposits compared to 81% among retail investors, meaning the crash of the MOEX had a significant effect on the wealth of those in higher wealth bands. Unlike HNW Russian investors, mass affluent individuals are unlikely to have been able to offshore much of their wealth. Deep and lasting damage can be expected to the middle of the Russian wealth market as well as any bank positioning itself in the premium market.