By Cecile Lefort
The country’s oil and gas giants have emerged as the obvious winners from a war in the Middle East that has sent energy prices soaring. But a handful of unlikely stocks are also staging a surprising rally as investors seek out companies that will thrive because of the conflict, or in spite of it.
The search for winners is taking place against a volatile market. The Australian sharemarket soared on Wednesday, fuelled by the desperate hope that a temporary ceasefire between the United States and Iran might finally reopen the crucial Strait of Hormuz – a narrow choke point that currently holds one-fifth of the world’s energy supply hostage.
But markets remain well below where they stood before the US first struck Tehran on February 28. In Australia, the S&P/ASX 300 has shed 3 per cent.
“The market often overlooks indirect beneficiaries of recent events,” said Charles Casey, a portfolio manager at Solaris. “We see some unexpected beneficiaries from the Middle East tension, which puts a spotlight on two areas – secure supply chains and a period of elevated inflation.”
Casey, whose firm manages around $9.5 billion, identified Lynas Rare Earths as a standout performer. The company produces minerals used in high-tech products, green energy and defence. “Following the war in the Middle East, strategic and secure supply chains have become more important,” he said.