Over the weekend, Iran's supreme leader was eliminated by US.
In the last few months, the president of Venezuela was removed by US.
Why are these two countries important?
You might have guessed it.
Oil.
Iran produces and ships 13% of the oil to China. This is shipped through "shadow fleets" which are not publicly disclosed
Venezuela ships 5% of its oil to China. While this is not a high number, the friendly relationship between Venezuela and China is important. Think of it like a backup oil suply.
This represents almost 20% of China's oil imports (which is most likely understated, as no one in their right mind would honestly report about shadow oil deliveries)
By controlling both Iran and Venezuela, this leads to China relying on Russia on oil and going to the public market to buy oil.
If you searched up oil companies, they have been going up for the last 3 weeks (which is interesting given that the strike only happened this weekend) - cough cough, insider.
The US's military movement on these countries creates an imbalance on power politically, but more importantly, this creates an oil supply shortage for non-Western countries.
This will lead to a temporary spike in oil price (and oil companies' share prices)
While China mainly relies on coal for electricity generation, a reduction in 20% (or even 30%) of its oil imports will slow down logistics and manufacturing
In Investing Accelerator, we will analyze the macroeconomic and the stock market impact at a deeper and more detailed level.
That's why the weekly update on the overall market conditions is important.
Remember that sometimes war doesn't mean the market will go down.
Cheers,
Eric
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Eric Seto
Chartered Professional Accountant (CPA)
Chartered Investment Manager (CIM)
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Disclaimer: This communication is provided for educational and informational purposes only and does not constitute investment advice, a recommendation, or an offer to invest in any fund or strategy. No advisory relationship is formed by receipt of this content. Any references to strategies or markets are general in nature and do not reflect the performance of any client account or investment product.