Global markets appear complacent, and investors should be being more
proactive to safeguard and grow wealth, warns the CEO of one of the
world’s largest independent financial advisory organizations
amid the escalating Iran conflict.
The warning from deVere Group’s Nigel Green comes as the
intensifying conflict with Iran, the US and Israel, among other
nations, pushes oil prices sharply higher, triggers heavy selling
across Asian equities and unsettles global markets over the past 24
hours.
US and Israeli strikes on Iran have triggered retaliatory attacks
across the Gulf, threatening shipping routes near the Strait of
Hormuz — the narrow corridor responsible for transporting
roughly 20% of the world’s oil supply.
Oil markets have already reacted sharply, with Brent crude rising
around 1.4% on Wednesday to roughly $82.5 a barrel after surging in
the previous session.
Prices have climbed more than 12% in just a few days as traders
assess the risk of a prolonged disruption to Middle East supply.
Stock markets are beginning to respond, although Nigel Green says
the reaction still appears “restrained” given the scale
of the geopolitical shock.
Asian equities suffered some of the sharpest moves on Wednesday.
South Korea’s KOSPI index plunged more than 10% in a single
session, wiping out roughly $430 billion in market value and marking
its steepest fall since the global financial crisis.
Wall Street has also felt the pressure. The S&P 500 fell around
0.9% in the latest trading session and briefly touched its lowest
level in more than three months before recovering part of the losses
by the close.
Despite the volatility, Nigel Green warns investors are still
underestimating the potential economic consequences of the conflict
involving Iran.
“Markets are reacting but the broader response still looks
complacent.
“Investors appear to be assuming the conflict will remain
limited and short-lived. Geopolitical shocks tied to global energy
supply rarely unfold in such a tidy way.”
The consequences extend far beyond energy markets. “Energy
sits at the core of the global economy,” notes the deVere
CEO. “As oil prices surge because supply routes near Iran
are threatened, the effects feed into transportation costs,
manufacturing, agriculture and consumer prices.”
He warns that the inflation outlook could shift quickly if oil
continues rising.
“Energy prices are one of the fastest ways geopolitical
tensions translate into economic pressure. When crude rises
sharply, it pushes costs higher across supply chains and can
complicate the outlook for inflation and interest rates.”
Financial markets had been positioned for easing inflation and
gradually lower borrowing costs this year, he notes, but the war
involving Iran introduces a significant new risk to that outlook.
“Investors had been pricing in a relatively stable economic
backdrop,” Nigel Green says.
“The conflict involving Iran introduces a powerful new
variable that markets may not yet be fully reflecting.”
He believes recent market behaviour reflects a pattern that has
developed over the past decade.
“Financial markets have become accustomed to geopolitical
shocks fading quickly,” observes the CEO.
“This experience has created a degree of complacency in
portfolio positioning.”
He argues the current crisis deserves far greater attention from
investors. “The Middle East remains central to the global
energy system. Should tensions involving Iran escalate, the
economic implications will spread across energy markets, inflation
and financial assets worldwide.”
Investors should be reviewing portfolio positioning now rather than
waiting for volatility to intensify, he adds.
“Periods of geopolitical stress create both risks and
opportunities,” Nigel Green says.
“Energy producers and commodities often benefit when supply
is threatened, while sectors exposed to rising costs can face
significant pressure.”
Diversification remains critical. “Investors should ensure
their portfolios are balanced across regions, sectors, asset
classes and currencies so they are better prepared when volatility
rises.
“Concentrated portfolios are particularly vulnerable when
geopolitical tensions escalate.”
The deVere CEO concludes: “Complacency must be avoided by
investors right now.
“The war involving Iran, the United States and Israel is
already affecting energy markets, inflation expectations and
global equities.”
“Investors who act early to strengthen portfolios place
themselves in a far stronger position to safeguard and grow their
wealth as geopolitical risk moves back to the centre of global
markets.”
Research oil and gas stocks at Investorideas.com
free stock directory
Investorideas.com
is the go-to platform for big investing ideas. From breaking stock
news to top-rated investing podcasts, we cover it all. Our original
branded content includes podcasts such as Exploring Mining, Cleantech,
Crypto Corner, Cannabis News, and the AI Eye. We also create free
investor stock directories for sectors including mining, crypto,
renewable energy, gaming, biotech, tech, sports and more. Public
companies within the sectors we cover can use our news publishing and
content creation services to help tell their story to interested
investors. Paid content is always disclosed.
Learn more about our news, PR and social media, podcast and content
services at Investorideas.com
