The ongoing conflict in the Middle East is having a significant impact on global financial markets, affecting everything from oil prices to currencies and equity markets – and ultimately, the retirement savings of investors in South Africa.
According to Stephan Erasmus, investment analyst at Anchor Capital, the war has several channels through which it affects South African savers. “The Iran war is a significant event for South African savers, as it negatively affects them through falling equity values, a weaker rand, and rising oil prices,” he said.
Impact on SA Markets
The JSE’s All Share Index has come off, although not dramatically, as it is only 3% down over the past month and is not tracking oil prices. However, it could well be being buoyed by Sasol, which is likely benefiting from elevated oil prices and was up 11.5% on the day as of lunchtime yesterday.
Brokers and asset managers’ advice during a period of shock, such as now, is to hang tight and take a longer-term view – in fact, over a five-year period, the ALSI is up 71.54%. Last July, the index hit a record high. As of midday yesterday, the S&P 500 was down 1.52% on the day, although it’s up 69.21% over the past five years.
Expert Insights
Kevin Lings, chief economist at STANLIB, said oil prices rose quickly on fears that the conflict could disrupt supply, triggering broader market volatility. “Markets responded quickly to the outbreak of war. Oil prices moved higher on fears of supply disruptions, energy equities outperformed, broader global equity markets saw increased volatility and periods of risk aversion, while safe-haven assets, including the US dollar, attracted inflows,” he said.
The rand has also come under pressure. According to Lings, the currency weakened about 4.3% against the US dollar since late February as of Monday. For more information on the impact of the conflict on global markets, visit the Wikipedia page on the 2023 Iran conflict.
Here are some key points to consider:
- The conflict in the Middle East is affecting global financial markets, including oil prices, currencies, and equity markets.
- The JSE’s All Share Index is down 3% over the past month, but is still up 71.54% over the past five years.
- Brokers and asset managers advise taking a longer-term view and not making rash decisions during times of market fluctuations.
