🅦🅗🅐🅣 🅗🅐🅢 🅗🅐🅟🅟🅔🅝🅔🅓?
A military commander, Qassem Soleimani, second to only the Iran’s Supreme Leader Khamenei in power in Iran, was killed in a US airstrike at Baghdad’s airport, tensions in the Middle East have been boiling as Iran promised to retaliate and Trump promised that US would response disproportionately.
Investors are left with ponders if the attack is a harbinger to another war or just one of many dramatic events that ultimately offers buy the dip opportunity for markets to head higher.
🅗🅞🅦 🅓🅘🅓 🅜🅐🅡🅚🅔🅣🅢 🅡🅔🅐🅒🅣?
Movements within the global equity markets have been more modest than pundits would have anticipated and remained resilient, indicating that investors seem to view that Iran’s recent retaliation strikes on US Airbase are superficial, and most importantly, this period of tension will pass. At this current juncture, in my point of view, investors are still optimistic on 2 reasons:
(1) Oil Prices only climbed higher as geopolitical tension escalates, but not spiked, which is attributable of the oil market is still having spare supply from oil exporting countries.
(2) Retaliation Strikes from Iran is perfunctory and somehow expected, so as to prevent entering a war with US which would lead to disastrous consequences.
🅑🅤🅛🅛🅢 🅢🅗🅞🅤🅛🅓 🅢🅣🅐🅨
After sealing a trade truce with China, bulls in equity markets have been charging and solid economy will help Trump to secure his 2nd term of US Presidency. Nevertheless, if tension continue to escalates, the outlook for the global economy and financial markets will be gloomy thus hurting his prospects of getting re-elected.
While we foresee that geopolitical uncertainty will likely persist in the short-term, the recent market developments proved that it hasn’t been enough to turn bulls into bears.
Our narrative within our iFAST 2020 Key Investment Themes of recovery within global economic activities, major turnaround for Asian and EM equities and global semiconductor upswing and reduced political uncertainties from trade front, and our calls on 𝙚𝙦𝙪𝙞𝙩𝙞𝙚𝙨 𝙨𝙩𝙞𝙡𝙡 𝙖𝙩𝙩𝙧𝙖𝙘𝙩𝙞𝙫𝙚 𝙤𝙫𝙚𝙧 𝙛𝙞𝙭𝙚𝙙 𝙞𝙣𝙘𝙤𝙢𝙚, 𝙧𝙚𝙢𝙖𝙞𝙣 𝙪𝙣𝙘𝙝𝙖𝙣𝙜𝙚𝙙.
Risk assets aside, keep up the hunt for capital preservation is equally important to build a balanced portfolio and seek for risk-adjusted return, is what you should do especially when the global economy is facing an inflection point.
(thanks to iFast Senior Investment Consultant, Sherman Tam Cheng Wei)