Damascus, March 6 (SANA) – Global financial markets are witnessing a shift toward safer assets as investors reassess geopolitical risks following the escalation of military conflict between Israel and the United States on one side and Iran on the other since Feb. 28.
Investment funds have begun redirecting capital away from projects in the Middle East and some emerging markets, seeking safer destinations such as U.S. bonds and gold, which has seen increased inflows in recent days.
Capital outflows from emerging markets
Early March trading data point to a wave of portfolio outflows from several Asian markets. According to a report by BMI Research, a Fitch Solutions unit, India has experienced notable foreign portfolio withdrawals amid warnings that prolonged conflict could weigh on investment and weaken gains expected from trade agreements with the United States and the European Union.
Bloomberg data show that Taiwan recorded $7.9 billion in capital outflows during the first week of March, the island’s largest weekly withdrawal on record. South Korea also saw about $1.6 billion leave its markets, while Asian equities excluding China recorded total outflows of $6.3 billion.
Pressure on regional assets
In the Gulf region, rising geopolitical tensions have increased pressure on financial assets. A Bloomberg analysis noted that the U.S. dollar strengthened by about 1.5 percent during the first week of March, adding pressure on emerging economies by raising debt-servicing costs.
Regional stock markets have also seen declines, while sovereign bond spreads in several Gulf states have widened, reflecting higher risk perceptions among global investors.
The Financial Times reported that three of the four largest Gulf economies—Saudi Arabia, the United Arab Emirates, Kuwait and Qatar—held discussions about the economic pressures created by the ongoing escalation.
Morgan Stanley has meanwhile revised its outlook on several markets, downgrading India to “equal weight” and warning that Asia remains highly dependent on Middle Eastern supplies of crude oil, refined products and liquefied natural gas.
Global economic concerns
Analysts say continued instability could have broader global economic consequences. Economists at Kotak Mahindra Bank warned that prolonged disruption in the region could slow India’s economic growth and weaken its currency, given the country imports more than 80 percent of its oil needs.
Market observers say the current outflows signal a broader reassessment of geopolitical risks and could mark a new phase in global investment flows, with the direction of capital likely to depend on the duration of the conflict and the ability of regional economies to absorb the shock.
