Asia Braces for Fuel Shock as Iran War Escalates | Insight with Haslinda Amin 03/18/2026
Speakers
Summary
- The Iran war has caused a prolonged shutdown of the Strait of Hormuz, creating a supply-driven oil price shock with Brent above $100, most acutely felt in Asia.
- Goldman Sachs cut India's FY2027 growth forecast to 6.5% from 7%, citing high oil prices (90% of crude is imported) and gas shortages that are halting industrial production; risks remain to the downside if oil stays above $100.
- The Fed is expected to hold rates, maintaining an easing bias, as the oil shock presents a supply-side problem that monetary policy can't control and may eventually dampen demand.
- Howard Marks argues investors are better off buying AI-focused stocks to capture upside rather than lending to AI companies, given the unpredictability of winners and governance risks.
- Morningstar's Lorraine Tan sees a selective buying opportunity in quality software/tech names sold off indiscriminately, citing Tencent (~20% upside) and Nintendo, but maintains Sell calls on Samsung and SK Hynix due to an expected future memory price downturn.
- Aoifinn Devitt views energy stocks (including green energy) as a relative safety trade given insatiable power demand, but is cautious on gold due to volatility from non-traditional buyers (central banks, Chinese retail).
- Strategist Mark Cudmore is bearish, arguing global equities (ex-U.S.) are having their worst month in 3.5 years and the pain is underappreciated; the asymmetric skew is for stocks to fall further unless the Strait reopens.
- Nvidia is restarting H200 production for China after securing U.S. licenses, highlighting adaptive supply chains amid restrictions.
- A key uncertainty is the duration of the Strait of Hormuz closure; the longer it persists, the greater the demand destruction and inflationary impulse for Asian economies.
Trade Ideas
The speaker explicitly stated, "We would see energy stocks as a fairly good safety trade. Not just traditional fossil fuels... but also... green energy stocks have done well because we do know that the demand for electricity and power is insatiable." The current geopolitical conflict has caused an oil price shock, but demand for power is structural and predates the conflict. Energy stocks, broadly defined, are positioned as shock absorbers in a volatile environment where traditional safe havens have not worked. LONG because these stocks offer relative safety and exposure to a non-discretionary, essential demand base during a period of high uncertainty and supply disruption. A rapid de-escalation of the Iran conflict and reopening of the Strait of Hormuz, leading to a sharp normalization of oil prices and reduced risk premium.
The speaker stated they "were cautious about recommending gold because of the potential technical factors affecting the volatility" driven by marginal buyers like central banks and Chinese retail investors. They added, "as to be moving in, tactically expecting it to act as insurance, we don't think it is likely to fulfill that insurance role." The volatility profile of gold has changed due to new, non-traditional buyers, making its price action less predictable and potentially undermining its classic role as a geopolitical hedge or portfolio insurance in the current crisis. AVOID for tactical investors seeking reliable insurance. While a small strategic allocation may be supported, the speaker advises against moving in tactically with that expectation. A severe escalation of the conflict triggering a classic, broad-based flight to safety that overrides the current technical volatility drivers.
The speaker identified Tencent as a buying opportunity, seeing "maybe a little bit more" than ~20% upside to its intrinsic value. She stated its underlying economic model is solid, it will benefit from AI in reducing programming costs, and its strong platform (WeChat) is a defensive moat. The recent selloff in software names has been indiscriminate. Tencent's core gaming and social media businesses are stable, and its vast user network and IP position it to monetize AI advancements and improve productivity, which is not fully reflected in its current price. LONG due to a combination of valuation upside, resilient core business, and strategic positioning to capitalize on AI efficiency gains. Disappointing earnings results or increased regulatory scrutiny from Chinese authorities impacting its growth plans.
The speaker named Nintendo as a specific buying opportunity created by the recent selloff, citing it as a company that has "been weak on a relative basis this year." Nintendo owns strong intellectual property (IP). The selloff appears overdone relative to its solid underlying economic model and the durable value of its IP, which provides a competitive advantage. LONG as a valuation play on a quality name with valuable IP that has been sold off disproportionately. A significant downturn in consumer spending on gaming or a major product cycle failure.
The speaker maintains Sell calls on both Samsung and SK Hynix, stating they are "still seeing them to be 25%-30% above where we want their share prices to be." The view is based on expecting the memory price cycle to come off as new capacity comes online. The current high memory prices are cyclical. Significant new capacity is planned and will come to market, likely depressing prices and earnings for these dominant memory producers in the coming years. SHORT (or AVOID) based on anticipated cyclical downturn in memory prices, making current valuations unattractive despite recent pullbacks. Sustained, stronger-than-expected demand for memory (e.g., from AI servers) that outpaces new capacity additions, prolonging the cycle's peak.
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Speakers: Aoifinn Devitt, Lorraine Tan · Tickers: XLE, GOLD, TCEHY, NTDOY, SAMSUNG, 000660.KS