Does conflict in Iran change the international investment narrative?

Until the events of the past week, the list of positives for international investors in 2026 was an extensive one.

In Europe, for instance, we witnessed the emergence of European companies and economies from a three-year funk; while in Japan, equity markets were up double digits. Emerging markets also outperformed, with Korean equities soaring to all-time highs.

Until the end of February, this litany of positive news was reflected in the numbers: international equities markets continued to climb higher even after 2025’s stellar outperformance, with the MSCI ACWI ex USA index adding 11.35% through the end of February, a figure that had been trimmed to 5.31% by March 3. US equities, in contrast, were more or less flat, with the S&P 500 up 0.67% through February, sinking slightly to 0.62% through March 3.

Now, though, it feels as though the calculus may have changed. The bombing of Iran, starting on February 28, triggered a drastic global equity sell-off on investors’ fears of higher oil and natural gas prices and a consequent reignition of global inflation. The secondary effects of this sequence could see central banks adopting less-accommodative policies, while global consumers could be less willing and able to spend.

With all of the above in mind, there are two key areas we are keeping a close eye on:

• Qatar’s LNG production Qatar’s Ras Laffan Industrial City is the world’s largest producer of liquefied natural gas (LNG), exporting about 77 million tons per year. This facility has been shut down by the hostilities, causing Dutch TTF Natural Gas futures to rise by 54% in the first two trading days of March. There doesn’t appear to be any material damage to the facility, which is good. If the facility were to be damaged or if it remained off-line for a longer period, restarting it could take two to three months. Sustained higher gas prices will negatively impact some European economies, such as Germany, that are dependent on LNG to run factories and generate electricity.
• The Strait of Hormuz About 20 million barrels of oil per day — roughly 20% of global production — move through the Strait of Hormuz. Around 80% of this goes to Asia, with about half of that going to China alone. Japan, India and Korea are also large importers of oil passing through this key waterway. We aren’t particularly concerned about the impact on China as our research shows that this year the country has dramatically increased its import volumes, perhaps in anticipation of a blockade. Word that President Trump will provide naval escorts and that the US International Development Finance Corporation will offer insurance is good news for those Asian countries that are dependent on running their economies on imported oil.

Bottom line: we can’t tell how long the current situation in Iran will last nor how successful the regime might be in its aim of generating inflation to use as leverage against the US. The lessons of the past teach us that geopolitical events do not generally have a long-term negative effect on equity markets. Ultimately, it is fundamentals that matter.

Economic data out of Europe for January and February have pointed towards the recovery that we expected. We believe emerging markets look attractive given how strong the AI story is in Asia, especially Korea and Taiwan. We also believe Latin America looks to be in a good place given how global commodity prices have risen with the buildout of data centers to support AI. Lastly, thanks to trade agreements with both the US and Europe, consumer spending in India should strengthen.

Historically, our investment teams have embraced market volatility. It’s in these types of markets that mis-pricings can be created. We remain committed to executing our time-tested investment processes and are steadfast in seeking to deliver positive performance to our valued customers.