Sam Dickie: Fisher Funds expert on how investors can prepare for geopolitical disruptions

The Israel-Iran conflict has continued on for a week - and it's seen markets dropping as more fear the conflict intensifying.

Experts also believes markets are likely to drop further if the US gets more involved in the conflict.

Sam Dickie from Fisher Funds explains the market impact of the conflict.

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:17):
We've moved from tariff headline shockers and then we've moved
sadly into geopolitical headline shockers. How are global investors thinking
about this that thus far? How can they navigate this uncertainty?
We've got Sam Dickey from Fisher Funds with us to
explain this. Hey Sam, here, that's it going very well?
Thank you. So we're a week into this thing now
between Israel and Iran. How do you see the global
investors thinking about things? How are the asset markets and

(00:38):
the equities and bonds and commodities and stuff responding to this?

Speaker 3 (00:42):
Yes, it's always awkward talking about a war or real
human tragedy through the lens of asset markets, and sadly,
geopolitical risk is something that you and I to regularly
talk about. So if we look at equity markets, currencies
and commodity prices since the attacks, the local stock market
of Tel Aviv, it fell initially, but it's now actually
up two percent since then. The Iranian stock market is

(01:06):
hard to get a beat on, as it's sanctioned by bloom,
but it's a little weaker. Globally, equities have been very resilient.
The only interesting thing I'd call out there is while US,
Ossie and New Zealand markets are near flat, Europe is
a decent amount weaker because it's more exposed to an
oil price shock as it relies more heavily on imported oil,
and it's simply closer to the situation and oil is

(01:26):
probably worth thirty seconds. It's still up fifteen percent from
this time last week, so it hasn't calmed down, and
that's because I Ran itself was five percent of global
oil exports, which is meaningful, especially when you considered that
the oil market is always one percent either side of
being in balance. And then of course people are pricing
in a small probability that the conflict escalates in the

(01:48):
Middle East accounts for fifty percent of global oil exports.

Speaker 2 (01:52):
SAM In the past, when we've had similar situations like this,
how have the markets responded?

Speaker 3 (01:58):
Yeah, so you and I talked in February twenty twenty
two when Russia invaded Ukraine, and we talked in October
twenty twenty three when Harma attacked Israel, and the market
did not behave the way everyone thought it would back then.
So with Ukraine, the main impact was expected to be
European gas prices or energy prices, because remember, europe gas

(02:23):
prices faced the perfect storm of the threat of Russian
supplies being cut off and a lack of alternatives. However,
after an initial spike, European gas prices fell eighty percent
from their peaks, driven by excess supply of a demand. Equally,
after the harmless attacks, oil prices did rise ten percent initially,
but a month or two later they were much lower.
So the pointers markets typically overreact in the short term,

(02:46):
but normalizing the medium term. And when it comes to commodities,
there's that famous saying that the best cure for high
commodity prices is high commodity prices. In other words, oil
spikes higher at the margin that will slow demand and
at the margin that'll encourage a marginal barrel of oil
into the market.

Speaker 2 (03:02):
Interesting, yeah, And so what does this all mean for investors?

Speaker 3 (03:04):
Then? It just really hard to you should I can't
construct your long term portfolio based around these painful events.
It's really they're really hard to predict. And if we
zoom out, what drives equity markets over the medium term
is corporate earnings growth and economic growth which drives corporate
earnings growth is still fairly solid, as you and I
have been discussing the last few weeks, and Powell said overnight,

(03:26):
the US jobs market is still robust. But the final
point I'll make here, and you and I have been
discussing this for a couple of weeks, is the twenty
two percent bounce in the US equity market in the
last few weeks means the risks are now a little
bit more balanced.

Speaker 2 (03:39):
From here at Josh, Hey, thank you very much, Sam,
appreciate and enjoy your long weekend. That Sam Dickey Official funds.

Speaker 1 (03:46):
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