I've increasingly come to believe that a day without Donald Trump in the headlines is a positive news day. The man with the deep orange tan rarely brings good news.
Unfortunately, Trump loves being in the headlines. And his instinct seems to be to rush headlong into terrible ideas whenever he gets the chance. He grabs the hot pan, runs into traffic, takes bad advice. Unfortunately, he's also the US President, so the world pays the price for his disaster movie instincts.
With the war in Iran, Trump has really outdone himself. Bombing Iran in the middle of nuclear deal negotiations is a new violent milestone even for the United States. The impact of the attack has rippled across markets, as Iran retaliated by closing the Strait of Hormuz, and hitting US military bases and Middle East energy infrastructure. Meanwhile, Israel and the US have been aggressively bombing Tehran, causing over 1,000 civilian deaths. Qatar's gas terminal, a major source of India's gas imports, is effectively shut down and Saudi Arabia's Ras Tanura refinery has been damaged. The costs, both financial and human, are going to be enormous.
To help investors parse the conflict, we have added an Iran war impact analysis for every stock. You can see for example, the impact for Reliance Industries. Check the About section on any stock page to see the analysis.
We also took a closer look at the stocks most affected by this Middle East crisis. There are also companies that may benefit, although talking about the winners of of a war makes me think of people saying that it's better to be seated in the front rows of a plane when it crashes. At the end of the day, 'winners' is a relative term.
The biggest losers of the Israel US Iran war
One of my ill advised decisions as a teenager was to take up roller skating, and it's one of those sports where I can confidently say that there are many losers, and few winners. The current stock market scenario is similar.
The war has triggered a sharp spike in oil and gas prices, and the depreciation of the Indian rupee. These macro factors can rapidly raise India's deficit and drive inflation, which impacts a broad range of sectors.
But there are some outsize dlosers, which are heavily dependent on oil or oil-linked raw materials. These are concentrated in a few industries, like oil & gas importers, aviation, and fertilizers.
The gainers (?) of the Israel US Iran war
Major Indian exporters could see their bottomlines improve if they are earning in dollars while the rupee depreciates. But winners, like we said, are relative. Chaos is bad for markets, and the global economy overall can very well take a sharp downturn, hurting everyone including exporters. So consider this list with an asterisk.
In addition to the above, there is also positive buzz about shipping companies like GE Shipping, which rose today in a down market. Closure of the Hormuz Strait and higher shipping risk could raise freight rates, boosting these stocks.
A broad rebound in markets is likely if there is a fundamental, positive change in access to oil and gas supplies. But how long this will take is anybody's guess, as both the US and Iran dig in their heels and talk publicly about the "endless" availability of their missiles, and willingness to fight. If one listens to twitter experts (advice: don't) the war could end tomorrow, or in eight years. The fact is that it is difficult to tell right now how much volatility we are in for, as investors flee to safe assets like gold, and ironically, the US dollar.
