Source: Finance Association
Author: Xiao Xiang
Following Hamas's surprise attack on Israel over the weekend, which caused the situation in the Middle East to suddenly escalate, global financial markets were also overshadowed on Monday;
This conflict may not only cause safe-haven assets such as gold and the US dollar to rise, but the stock prices of many listed companies that receive revenue from the Israeli market are also being impacted.
With Hamas's surprise attack on Israel over the weekend, which caused the situation in the Middle East to suddenly escalate, global financial markets were also overshadowed by Monday.
This conflict may not only cause safe-haven assets such as gold and the US dollar to rise, but the stock prices of many listed companies that receive revenue from the Israeli market are also being impacted. You need to know that global financial markets are struggling to cope with the negative impact brought about by high interest rates and the global economic slowdown, and the Saturday attack put new pressure on the market.
CMC Markets analyst Tina Teng wrote in a recent report released on Monday, “The clash between Israel and Hamas last weekend may heighten geopolitical tension in the Middle East region and trigger safe-haven deals. The market will closely monitor the ripple effect of the situation in the region on a range of assets.”
Since the Japanese and Korean markets were closed on Monday due to holidays, and the Hong Kong market in China was temporarily suspended this morning due to typhoon weather, the overall performance of the MSCI Asia Pacific Index during the day was flat.Here are some global themes worth paying attention to at the stock market level in this escalating geopolitical conflict between Palestine and Israel:
Technology stocks
Although Israel is a country with a small geographical area and a small population, it occupies an important position in the global chip market. Israel's semiconductor industry has a history of development for more than 40 years, and is one of the countries with the most complete semiconductor industry ecosystem in the world. The world's first handheld mobile phone, the first computer processor, and$Intel (INTC.US)$The first mobile phone chip etc. were all born here.
However, the impact of this geopolitical crisis may also be the first to appear in the technology industry, especially for many global chip giants.Over the past few decades, the high-tech industry has been the fastest-growing sector in Israel and is critical to the country's economic take-off. It accounts for 14% of Israel's jobs and nearly one-fifth of GDP.
including Intel,$IBM Corp (IBM.US)$,$Meta Platforms (META.US)$,$Alphabet-A (GOOGL.US)$/$Alphabet-C (GOOG.US)$,$Microsoft (MSFT.US)$with$Apple (AAPL.US)$The US tech giants, including them, are doing business or setting up R&D centers in Israel. Among them, Intel will undoubtedly receive the most attention tonight. The company is Israel's largest private employer.
In June of this year, the Prime Minister of Israel just said that Intel will spend 25 billion US dollars to build a factory in Israel, adding that this is Israel's biggest international investment in history.
An Intel spokesperson said on Sunday that the company is closely monitoring the situation in Israel and is taking steps to protect and support its employees. The spokesperson declined to say whether chip production would be affected by the latest war.
The world's largest manufacturer of artificial intelligence and computer graphics chips$NVIDIA (NVDA.US)$It said that the company has cancelled the artificial intelligence summit originally scheduled to be held in Tel Aviv, Israel next week, and that the company's CEO, Huang Renxun, was scheduled to deliver a speech at the summit.
Headquartered in Israel$Tower Semiconductor (TSEM.US)$It provides customers with analog and mixed-signal semiconductors, mainly for the automotive and consumer industries. The company recently stated that the company's operations are still normal so far.
In addition to chip manufacturers, the performance of cybersecurity stocks worldwide will also receive attention, because the world's leading cybersecurity solutions provider headquartered in Tel Aviv$Check Point Software (CHKP.US)$It is likely to be negatively impacted by the conflict between Palestine and Israel. Indian software exporters doing business in Israel include Tata Consultancy Services Ltd.,$Infosys (INFY.US)$, Tech Mahindra Ltd., and$Wipro (WIT.US)$.
Businesses doing business in Israel
Companies with Israel as their main market will also be the focus of investors' attention. These companies include:The one in China's A-share market$Nanjing Xinjiekou Department Store (600682.SH)$, in the US market$Taboola Com (TBLA.US)$,$Kenon (KEN.US)$etc.
Some Chinese electric vehicle manufacturers are also becoming the focus of attention.Among them,$XPENG-W (09868.HK)$/$XPeng (XPEV.US)$In July of this year, it was announced that it had reached a strategic cooperation with Israeli car importer CarassoMotors (CarassoMotors) to expand the Israeli market. Xiaopeng Motor also announced on September 27 that it has shipped 750 cars to the Israeli market, the largest single batch export volume since this year.
Furthermore,$BYD COMPANY (01211.HK)$Israel was included in its overseas target market for the first time last year. In the first five months of this year, among all car brands, including fuel vehicles, BYD was the fifth best-selling brand in the Israeli market. The company's A-share price fell 3% during the morning of the day, then the decline narrowed.
In other markets, the one that owns the port of Haifa in IsraelIndia Adani Port Co., LtdThere was a 3.6% drop during the day.
Of course, as this geopolitical conflict may cause a surge in demand for Israel to purchase more arms, this conflict may also causeUSA$Lockheed Martin (LMT.US)$and Europe$BAE Systems plc Sponsored ADR (BAESY.US)$Other military stocks have benefited.
Generic drug industry
Israel is a global generic drug powerhouse.This military conflict is likely to be Israel, the world's largest generic drug manufacturer$Teva Pharmaceutical Industries (TEVA.US)$The operation of the company (Teva Contractors) caused a dragTherefore, the stock price performance of global generic drug manufacturers also deserves investors' attention, including Indian generic drug company Dr. Reddy's Laboratories Ltd. Lupin Ltd.
India's Sun Pharmaceuticals Ltd. (Sun Pharmaceuticals Industries Ltd.) holds 72% of the shares in Israeli pharmaceutical company Taro Pharmaceuticals, which fell 2% in early trading in Mumbai.
Energy and Shipping Unit
Although Israel is not a major oil producer, the growing tension in the Middle East is likely to boost energy stocks.
As war risk premiums returned to the market, US WTI crude oil rose above $85 per barrel during Asian session trading. Shares of Asian producers such as Australia's Woodside Energy Group Ltd. (Woodside Energy Group Ltd.) and Australian gas giant Santos have all risen by more than 3%.
$Chevron (CVX.US)$,$BP PLC (BP.US)$,$Shell PLC (SHEL.US)$with$TotalEnergies (TTE.US)$Stock prices of oil giants such as these may also rise during Monday's trading hours.
Manish Bhargava, fund manager at Straits Investment Holdings Pte, said the attack on Israel may increase market volatility, making investors more inclined to avoid risks in the short term. If geopolitical tension breaks out in the Middle East and oil production or transportation is interrupted, it could lead to a sharp rise in oil prices.
However, given that many industry insiders are currently worried that Iran might be involved in this conflict between Palestine and Israel, the performance of some shipping stocks may be tested.Any interruption of shipping routes near the Strait of Hormuz could hamper the performance of shipping stocks such as Evergreen Shipping in Taiwan and Germany's Hapag-Lloyd.
Diamond processing and gold stocks
Diamonds are one of Israel's biggest exports, and the Israeli diamond industry focuses mainly on processing operations such as cutting and polishing rather than mining.
According to comprehensive supply chain data in the industry,Russia's largest diamond company, Alrosa, receives 8.2% of its annual revenue from Israel, and the company is becoming the focus of market attention.Meanwhile, Sarine Technologies, the world's first diamond technology company, fell by as much as 3.1% in the Singapore market on Monday.
Other related Asian stocks include Indian miner NMDC Ltd., jewelry manufacturer Kalyan Jewellery India Ltd, and Titan Co.
At the same time,Due to heightened tension in the Middle East, Asian gold mining stocks such as Australia's Newcrest Mining Company rose along with gold prices on Monday due to safe-haven demand. In the H-share market,$ZHAOJIN MINING (01818.HK)$,$ZIJIN MINING (02899.HK)$,$SD GOLD (01787.HK)$The daily increases also reached 4.6%, 3.7%, and 3.5%, respectively.
editor/tolk