Iran war changes rules: Asian markets lose investors

Traders Union
All News
Financial News
Asian markets lose investors

Asia loses its momentum amid conflict

Asian markets faced significant pressure this week. The MSCI Asia Pacific index fell roughly 6%, while the U.S. S&P 500 barely moved, declining only about 0.1%. This marks a turning point for the popular investment approach known as “sell America, buy Asia,” where global funds had increasingly shifted money toward fast-growing Asian markets.

The sharp rise in energy costs is the main driver of market stress. The conflict in the Middle East has heightened concerns over potential disruptions to shipments through the Strait of Hormuz, which accounts for around 20% of global oil trade.

Rising oil prices intensify inflationary pressures and could hit the largest Asian fuel importers. Goldman Sachs estimates that a 20% increase in Brent crude could reduce the revenues of China, India, and Indonesia by about 2%.

Profit-taking in the technology sector adds to the pressure. Over the past year, markets in South Korea and Taiwan surged thanks to the AI boom and chip demand, but investors are now beginning to trim positions.

Volatility on global markets

Geopolitical tensions have triggered wide fluctuations across global markets. Brent crude rose above $82 per barrel, marking a fifth consecutive day of gains.

Despite early-week losses, some Asian markets attempted a rebound. For example, South Korea’s Kospi jumped nearly 10% after the government activated a KRW 100 trillion ($68 billion) market stabilization fund.

Yet the overall trend remains cautious. Investors are returning to the dollar and U.S. assets, traditionally considered safe havens during geopolitical uncertainty. Demand for gold and government bonds is also increasing.

Risks for the global economy

Energy market disruptions could become a critical factor for the global economy. Since the conflict began, oil prices have risen roughly 10–13%, and analysts warn prices could exceed $100 per barrel if supply interruptions intensify.

This is particularly sensitive for Asia, which depends heavily on energy imports from the Middle East. If the conflict persists, export-oriented industries and tech companies—previously growth drivers—could be adversely affected.

In the coming weeks, investors will closely watch the course of military actions, the stability of oil shipments, and central bank responses. These factors will determine whether capital continues returning to the U.S. or if markets revert to the previous strategy of global asset reallocation.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.