(Bloomberg) — Scott Minerd, chief investment officer of Guggenheim Investments, cautioned about the risk of Russia retaliating against economic sanctions through cyber warfare on the financial system.
“The likelihood of a cyber attack on our payments system is high,” said Minerd, who last year warned about the sustainability of the global payment system and threats from hackers. “If they cripple the payments system it’s going to seize up markets,” he said.
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The European Union has agreed to cut off seven Russian banks from the SWIFT network as part of the sanctions imposed on the country after its invasion of Ukraine. The financial-messaging system ties more than 11,000 entities across the world and enables trillions of dollars of transactions.
Read more: Plans for SWIFT Ban Spares Banks With Energy Ties
Minerd acknowledged that Russia hasn’t yet conducted a major cyber attack of this sort and any attack would cause temporary dislocation, but he cautioned that Ukraine would be the primary target.
Even with his broader concerns, Minerd expressed some optimism about the prospect for markets amid the turmoil.
Guggenheim has been purchasing preferred stocks and equity indexes, but hasn’t been able to capitalize on some debt investments.
“We’re trying to buy high-yield bonds and bank loans, but the trading is so thin,” he said.
Since Guggenheim doesn’t typically buy individual stocks, Minerd has been acquiring beaten-down payments stocks in the Americas through his personal account. “These were the darlings of the Covid-era, and they’ve been beat up, they’re cash flow positive and have very reasonable multiples,” he said. “These are growth stocks.”
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