Israel-Hamas War: The implications for your portfolio

Israel-Hamas War: The implications for your portfolio

We find ourselves amidst an unsettling period as the crisis between Israel and Hamas unfolds. Our hearts go out to all affected by the ongoing conflict. We hope for a peaceful resolution to ease the suffering in these tough times.

Many of our impact investors have asked about how this situation might affect your investments with Inyova. In this update, we tackle important questions like:

  • Why is the crisis in Israel and Gaza a concern for global markets?
  • How is the Hamas-Israeli war affecting energy markets?
  • What does this mean for your Inyova portfolio?

Why is the crisis in Israel and Gaza a concern for global markets?

Our world is powered by energy which fuels our industries, homes, and everyday lives. While a shift towards renewable energy is progressively on the rise, a substantial portion of our energy still comes from oil and gas, majorly sourced from the US, Russia, and notably, the Middle East. This brings us to the ongoing Israeli-Hamas conflict, which threatens to disrupt Middle East oil supply. Even though many Inyova impact investors invest in clean energy, disruptions in oil supply can reverberate across the global economy, as the global economy relies heavily on fossil fuels.

Investors often scrutinise energy markets (fossil fuel supply and demand) for indications about economic health. In addition to affecting stocks, bonds, and overall market stability, shocks in energy supply chains can affect global financial markets.

How is the Hamas-Israeli war affecting energy markets?

A third of the world’s oil supply comes from the Middle East. Now, with the conflict, the regular flow of oil is at risk. This isn’t great news, especially when the global economy is already juggling with inflation, high interest rates, and the ongoing invasion of Ukraine. Higher oil prices could add another juggling ball to that act, making things even trickier.

The ongoing Hamas-Israel conflict poses a significant threat to the Middle East’s continuous fossil fuel production and exports, which could adversely impact both the producing and receiving nations. 

Although oil flow remains unaffected for now, escalating tensions could lead to two major outcomes. Firstly, involvement of Iran in the conflict might prompt the U.S. to tighten sanctions, further pressuring the already strained oil market. Secondly, an unfolding U.S.-mediated agreement aimed at normalising ties between Saudi Arabia and Israel, with prospects of increased oil output from the kingdom, might face roadblocks.

The global economy now faces an additional layer of uncertainty originating from the conflict zone. Economists, political leaders, and investors are closely monitoring the developments to figure out how it’ll affect markets and economies. There have already been market reactions: oil prices have jumped as investors fear low supply, and other assets that investors tend to turn to during times of fear, like gold, have spiked as well. Both showcase the war’s ripple effects already beginning to permeate markets.

What does this mean for your Inyova portfolio?

The escalating crisis brings with it the fear of extended violence, which could ripple through the energy markets, global supply chains, and geopolitical cooperation, steering towards a potential trend of deglobalisation.

However, your portfolio is structured to navigate through such turbulent times. Its diversified nature, spanning various industries and geographies, incorporates investments regarded as stable or resilient during market apprehensions.

You are shielded from direct exposure to companies in the Middle East that are expected to bear the brunt of the ongoing conflict. The absence of investments in companies most likely to be impacted by these events adds a layer of protection to your portfolio.

Our commitment to transparent communication and sustainable investing remains unwavering during these trying times. While the situation creates uncertainty, your portfolio is engineered to weather global conflicts, and we continue to monitor the developments closely to ensure your investments remain aligned with your long-term objectives. This crisis reinforces the significance of impact investing, as we collectively strive towards a more resilient and inclusive global economy.

We encourage you to reach out to our Customer Success team with any concerns or questions. You can email us at [email protected] or call 044 271 50 00. We’re here to help! Our thoughts are with those affected by the crisis, and we remain hopeful for a peaceful resolution.

Disclaimer: The past performance of financial markets and instruments is never an indicator of future performance. The statements or information contained in this document do not constitute a recommendation, offer, invitation to buy or sell securities or financial instruments. Inyova AG accepts no liability whatsoever for the reliability and completeness of the information contained in this article. Liability claims against Inyova AG are published in this document are excluded. In addition, the statements contained in this document reflect an estimate at the time of publication and are subject to change. References and links to websites of third parties are outside the area of responsibility of Inyova AG. Any responsibility for such websites is disclaimed.
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