Middle East conflict prompts investors to rethink strategies

Escalating tensions in the Middle East are adding volatility to Vietnam's financial markets, as investors reassess investment strategies in response to risks related to oil supply disruptions, currency movements, and inflation pressures.

- By Kaitlyn Le

Analysts have begun assessing the potential spillover effects of the current conflict involving the United States, Israel, and Iran on regional economies. In a report released on March 11, Vietcombank Securities (VCB) said that although the conflict does not directly affect Vietnam’s economy, indirect channels such as commodity prices, exchange rates, and market sentiment could still create short-term volatility.

One of the key risk points identified by VCBS is the Strait of Hormuz, which handles a significant share of global crude oil and liquefied natural gas flows. Any disruption in the area could affect global energy supply and trigger sharp movements in oil prices.

"Following the escalation, global oil prices increased and financial markets shifted into a more defensive stance. The US Dollar Index rose to nearly 98.4 points, while gold prices also moved higher as investors sought safe-haven assets," the report said.

The Vietnamese stock market also reacted to developments in the conflict. Trading sessions at the beginning of the week showed divergence across sectors, with speculative inflows moving into stocks expected to benefit from the situation, including oil and gas and shipping, while other sectors faced correction pressure.

VCBS warned that indirect risks could emerge through exchange rate movements and imported inflation. Rising energy prices combined with a stronger US dollar may increase import costs and place pressure on the USD/VND exchange rate as markets continue to monitor the policy direction of the US Federal Reserve.