Analyst Warning: This Middle East Crisis Might Be Different, Do Not Underestimate the Risk of Out-of-Control Situations

Deep Tide TechFlow News, March 1 — According to Jin10 Data, as Iran launches missiles at U.S. military bases in Gulf cities, airlines suspend flights, and oil tankers carrying oil and other products halt transit through the Strait of Hormuz, the situation is becoming more chaotic. Rong Ren Goh, Portfolio Manager of HanYa Investment Fixed Income Team, stated that the tail risks in the Middle East have increased. The market will reprice itself, shifting from geopolitical shocks to regime risk shocks and long-term conflicts, rather than just retaliatory actions, unless Iran indicates willingness to negotiate. Analysts believe a greater risk lies in market complacency. The market has been assuming that the impact of the conflict will be limited and dismissing comparisons to Iran’s regime change in 1979. Barclays analysts noted that history strongly advises against buying on the rise during conflicts and instead recommends “selling the news.” However, it is concerning that investors have now become accustomed to the mindset of “selling the news,” potentially underestimating the risk of losing control of the situation. It is advised not to buy immediately on any declines. If the stock market experiences a significant correction, such as the S&P 500 dropping more than 10%, it could present a buying opportunity. But not right now.