Impact of the War in Iran
Kai Lam preaches patience while also looking for opportunities.
How does the conflict in the Middle East affect your portfolio?
The long-term political impact of the joint American/Israeli strikes against Iran is yet to be determined. What is readily apparent is that the conflict in the Middle East is having a clear impact on global markets. Kai Lam, JCIC’s Chief Investment Officer, appeared on BNN Bloomberg to provide his perspective on what it means for the Canadian economy and for your investment portfolio.
“With the war in Iran, we have elevated oil prices given the risk to supply,” Lam says. “It is an uncertain situation where we don't know when it will end. And so that's resulted in high oil prices and a higher US dollar against other major currencies. We also think that the gold price will have an elevated geopolitical risk premium that will persist, although that was there even before the war started.”
Looking specifically at the Canadian market, Lam says we are relatively better positioned because of our strong presence in both the energy market and gold. Those two asset classes comprise about a third of our market and both are seeing a rise in value.
“We've seen other markets such as Europe and Asia show greater sensitivity because they are big net importers of oil,” says Lam.
One thing Canada is not insulated against is the risk of global inflation that could climb as a result of higher fuel prices. Lam says that is something he has his eye on currently.
As for how JCIC is reacting to these market shifts, Lam says he is looking for weakness in certain stocks that he deems to be temporary. He also stresses patience.
“We don't know how long it'll last for, but we still see this market volatility as an opportunity. In this situation, we’re a buyer of dips. We’ve seen historically that this sort of geopolitical risk doesn't really impair long-term market performance. It will eventually fade, and so we are taking advantage of those opportunities.”
Important Dates:
Tuesday, March 17th — St Patrick’s Day
Wednesday, March 18 — Bank of Canada Policy Interest Rate Announcement
April 3rd-6th — Easter Weekend
Sunday, May 10th — Mother’s Day
Monday, May 18th — Victoria Day
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