Investors are eyeing up what investment opportunities and portfolio adjustments need to be made as a result of the conflict in the Middle East, according to new research from Charles Stanley Direct, part of Raymond James Wealth Management.
A majority (84%) of self-directed investors – dubbed DIY investors in that they actively choose their own investments – believe the current geopolitical climate in the Middle East will cause global inflation to increase. Of this, 33% believe it will cause global inflation to increase significantly, while 51% think it will cause it to increase slightly. With increases to global inflation, this can cause uncertainty in markets and investments.
Keeping the conflict in the Middle East in mind, investors are looking to make changes to their asset allocations.
43% of DIY investors are looking to increase their exposure to energy, while the same number (43%) are looking to increase their exposure to technology. Other key areas investors are looking to increase their exposure to include AI (42%), Defence (41%), and Gold (41%).
There are also those looking to reduce exposure to certain asset classes. Airlines (19%), luxury stocks (18%), and oil (15%) are the top assets where investors are looking to reduce their exposure, making sure they are taking the right level of risk with these in their portfolios.
Investments DIY investors are looking to increase or decrease exposure to following the recent conflict in the Middle East:
| Investments | DIY investors looking to increase exposure | DIY investors looking to reduce exposure |
| Energy | 43% | 14% |
| Technology | 43% | 11% |
| AI | 42% | 10% |
| Defence | 41% | 11% |
| Gold | 41% | 9% |
| Oil | 40% | 15% |
| Retail/consumer goods | 36% | 14% |
| Manufacturing | 33% | 13% |
| Silver | 32% | 12% |
| Telecoms | 31% | 12% |
| Airlines | 29% | 19% |
| Luxury | 28% | 18% |
When it comes to investment risk overall though, just 27% of DIY investors are looking to take a high level of risk in the next three months. Many are taking a more cautious approach, with nearly half (47%) looking to take only a moderate level of investment risk over this time
Rob Morgan, Chief Investment Analyst at Charles Stanley Direct, part of Raymond James Wealth Management: “Oil shocks can be challenging for markets, and this time is no exception. Almost every business relies on energy in some way, whether that’s powering factories, running delivery fleets, or heating stores and offices. When oil and gas prices rise, they ripple across supply chains and push up the cost of goods and services across the whole economy.
“In portfolios there aren’t many hiding places from an inflationary shock of this type, the potential ones being short-term, high-quality bonds, gold, and energy stocks. But if you’re investing for the long term and have a diversified approach, it’s usually best to just sit tight. Market timing – especially during geopolitical crises – is notoriously difficult. Unless your portfolio has major biases toward one sector or region, the ups and downs should be manageable.”
