‘Two Sessions’ congress: The economic goals in Chinese leaders’ coded language

‘Two Sessions’ congress: The economic goals in Chinese leaders’ coded language

Post By World artificial intelligence, Asia / Pacific, China, Communist Party of China, Economy, electric cars, Features, government, World economy, xi jinping

China’s “Two Sessions” congress that began this week is the country’s most important political event of the year. To understand what’s at stake, it helps to have some fluency in Chinese Communist Party (CCP) parlance. Terms such as “new productive forces” and “new three” appear vague, but they speak volumes about the party’s agenda during the 10-day congress.

China’s annual political extravaganza has attained cruising speed. The “Two Sessions” congress of two of the country’s most important political bodies has already touched on economic recovery, the modernisation of the army, foreign relations and the question of Taiwan.

During the event, nearly 3,000 members of the National People’s Congress (NPC) – China’s parliament – meet to set the legislative agenda for the coming year. The 2023 session set the roadmap for more than 2,000 measures that were adopted, according to the official Xinhua news agency.

Alongside the NPC meeting, the congress also hosts the Chinese People’s Political Consultative Conference, a body meant to give its opinion on the political priorities for the year. Some 2,000 members of the CCP and civil society debate under the watchful eye of Beijing.

The Two Sessions are framed by Chinese media as the best way for a foreign observer to understand how “Chinese democracy” works. They can thus offer a good reading of the political climate in China – provided one understands the CCP parlance in use. One of the best ways to build literacy is to spot the buzzwords that pop up again and again, as reported by Bloomberg News.

Most of them may seem obscure at first glance. What does Chinese President Xi Jinping mean by the “new productive forces”? What are the “new three” developments that participants in the Two Sessions often refer to? Knowing how to interpret these terms “enables us to understand the main developments in the economic and social policy of Xi Jinping and the government, beyond the official announcements”, says Marc Lanteigne, a Sinologist at the Arctic University of Norway.

These buzzwords are also a way to implicitly acknowledge mistakes. Chinese leaders “are never going to clearly say ‘no way’, but the coded language often heralds changes in direction, and thus a tacit acknowledgment that something wasn’t working anymore”, says Lanteigne.

To help make sense of it all, FRANCE 24 has examined three terms in use during these Two Sessions that can help clarify the CCP’s true perspective on China’s economic and social situation, a viewpoint that is not necessarily obvious in official media and public statements.

The ‘new productive forces’

Xi has been using this expression since at least September, but China’s president never specifies which forces he is invoking to rescue the country’s economy.

He referred to them again during the Two Sessions to affirm that they would enable China to reach a 5 percent growth target without any problems.

The “new productive forces” are “a modern version of expressions used by all Chinese leaders since Mao Zedong to designate the economic sectors that are going to be favoured”, explains Lanteigne.

The Sinologist is betting that Xi is referring to services – especially financial – and information technologies with the 2024 version of “productive forces”.

By invoking “new” forces, Xi also aims to sideline the “old” engines of Chinese growth. In other words, the president is indicating that it is time to stop “betting everything on investment in infrastructure and real estate”, says Lanteigne, who expects to see less construction of highways and railroads. Real estate developers, shaken by the fall of debt-laden Evergrande, have received confirmation that saving them is no longer a government priority, he adds.

‘AI plus’

Chinese Premier Li Qiang put the country’s “AI plus” initiative on the map. He made it the cornerstone of the “work report” published by the NPC on Tuesday.

Here again, “the contours of this concept are very vague”, says Lanteigne. The main idea is to support artificial intelligence in all sectors of the economy. But how, when, and where to begin? “We’ll have to wait for the details, but the ambition is clear: to make AI a driving force in the economy and boost artificial intelligence research”, he says.

China is far from the only country betting on AI: since the advent of ChatGPT, artificial intelligence has become the hot topic for everyone. But it’s the “plus” that is meant to distinguish China’s engagement.

“By adding a ‘plus’, the authorities want to give the impression that China is already at the next stage,” says Lanteigne.

The term suggests that Beijing has already mastered AI and is now looking for the best ways to use it. It also aims to counter the image of a country that is falling behind. Blame it on ChatGPT and its clones: all these tools come from the West, and a narrative has started to develop suggesting China is having trouble catching up.

The ‘new three’

The expression has gained popularity in the media and economic circles for over a year, as noted in a Citigroup bank report published in January 2024. During the recent debates in the NPC, Li expressed delight that “the new three have grown by 30 percent in one year”.

The term refers to solar panels, electric cars and batteries. “It’s not surprising that this term is being put forward at a time when China’s champion electric car maker – BYD – is displaying increasingly global ambitions,” says Lanteigne.

By using the term, the government is showing its support for a manufacturer whose commercial appetite is beginning to concern Western countries. In late February, US President Joe Biden described Chinese electric cars as a risk to American “national security”.

“It’s also a concept that complements the idea of ‘new productive forces’,” says Lanteigne. Once again, it’s a question of turning over a new leaf: these “new three” are opposed to the “old” sectors – textiles and cheap electronics – that were China’s international glory.

China aims to show countries that it intends to remain the “world’s factory”, but now for technological products with high added value.

These “new three” pillars have something in common: “They are meant to illustrate China’s ambition to move towards an eco-responsible economy,” says Lanteigne.

Solar panels represent renewable energy, while electric cars and the batteries that power them symbolise the decarbonisation of road traffic. The “new three” thus also serves as a new slogan for “green” China.

This article is a translation of the original in French.

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Is gender parity the key to economic prosperity? The IMF says ‘yes’

Post By World economic growth, IMF, International Women's Day (IWD), women, women's rights, World economy

Why does the world need more women in the labour market and managerial positions? Kristalina Georgieva, the International Monetary Fund’s Managing Director, shares her thoughts on the Global Conversation.

Research by the International Monetary Fund suggests that global GDP will increase when women are granted an equal playing field in the labour market and decision-making roles.

More specifically, reducing the gender gap in labour markets could boost GDP in emerging and developing economies by 8 per cent. Closing the gap entirely would increase GDP by 23 per cent on average.

But why is women’s empowerment essential for economic growth and development?

Underrepresentation in decision-making roles, particularly in politics, is a widespread issue. Statistically, women account for less than 25 per cent of representatives in parliament in seven EU member states including Hungary, Ireland and Greece.

The European Parliament fares better with a gender balance of 40 per cent women to 60 per cent men. The leaders of the EP and the European Commission are also women while some of Europe’smost influential financial bodies, like the European Central Bank and the European Investment Bank, have female presidents.

When it comes to climate change, the EIBdiscovered in 2022 that increasing the number of women in corporate decision-making roles could lead to a 0.5 per cent drop in CO2 emissions.

So how can Europe increase the number of women in positions of power to fast-track sustainable development and boost economic growth? Kristalina Georgieva, the Managing Director of the IMF shares her thoughts on the latest episode of the Global Conversation.

Europe still has work to do

**Sasha Vakulina, Euronews:**Ms Georgieva, two thirds of the world’s most prosperous countries in the world are in Europe, and yet income inequality is rife across the continent. How does inequality affect economic growth?

Kristalina Georgieva, IMF Managing Director: Growth and inequality are very tightly connected. But let me make a very important point for Europe: as a European, I’m proud that Europe is a place where attention to inclusion and equality has been relatively higher than in many other places. And as a result, Europe enjoys social safety nets, that were put to work after COVID-19, after the Russian invasion of Ukraine, to protect the most vulnerable people of society.

Now, this being said, can Europe strive to do even better? Of course, it can. Because what we face in Europe and actually across the world is very anaemic growth, slow growth. How can we boost growth prospects? Well, by tapping into all the resources we have. And that takes us to a particular aspect of inequality, which is gender inequality. Bring women into the labour force, into the power of our societies and economies more, and we would tremendously benefit.

Sasha Vakulina, Euronews: Let’s let’s look at it in detail. With traditional growth engines sputtering, many economies, as you said, are missing out, by not tapping into women’s potential. Now, how much are we missing out on?

Kristalina Georgieva, IMF Managing Director: Well, we are missing a lot. Unfortunately, based on the most recent World Bank analysis, there is not a single country on our beautiful planet where women are fully equal to men. So we have a work to do. And I can say from the analysis we do at the IMF, that the evidence is so overwhelming that everybody benefits.

In these days of slow growth, we can get up to a 23 per cent increase in GDP if we take in the emerging markets and developing economies. Looking at the global average, it is a 20 per cent increase. Why wouldn’t we want to do it, all of us?

Mind the gap

Sasha Vakulina, Euronews: Well, as you said, why not tap into that potential? We understand the stats, they are shocking, we know the reasons, and we know the possible benefits. How else can we push to make that happen?

Kristalina Georgieva, IMF Managing Director: The way to push is to have a credible data-based policy foundation. There is a very important ‘closing the data gaps initiative’ that the G20 has promoted. Part of it is to have credible data on the distribution of income, on what we should know when we make decisions as to how to eliminate these barriers.

We know that tax policies can help, we know that investment in early childcare can help, and we know that safe transportation can help so that women are not afraid to get on a bus or the metro. And we also know that how women are treated by the financial system can help, when women have access to finance on equal footing and they still don’t.

A small story from Brussels

Sasha Vakulina, Euronews: Ms Georgieva, despite significant progress in recent decades on the current pace of reforms, global gender gaps are estimated to close over the next three centuries. I’ll repeat that: three centuries! And one of the most important measures to improve the situation is increasing women’s representation in decision-making positions. This is something that you’ve got a lot to share about. How thorny was your path and what’s your take on that?

Kristalina Georgieva, IMF Managing Director: Well, I, started, my professional career as a young professor in Bulgaria. And, from the early days, one thing was clear to me: to be treated as equal, I have to work harder than my male colleagues. And I regret to say that has remained my experience almost throughout my whole professional life. So what I can tell women, young women in particular, is, despite that, there may be obstacles, but:

1. You can do it. You’re strong, you’re smart. You’re beautiful. You can step forward for yourself but also contribute to society by doing so.

2. When you do it – and that is a very important lesson I learned personally, and I saw it time and again in my professional life – believe in yourself. Do not hesitate to present your credentials with confidence.

When I was vice president for Human Resources we had a very important target to increase the proportion of women in senior positions to 40 per cent. And I can say the Commission did a great job but one thing that I noticed was we had two finalists, a man and a woman. They were interviewed and assessed against five criteria and had some strengths and weaknesses. They covered three of the five and less of the other two.

How did the man approach the interview? He said: “Look, I covered the most important three criteria in full, and I’m bringing my fantastic personality to the job. Of course, I’m the best person for the job”.

How did the woman interview? She said: “Well, I only covered three of the criteria, I don’t know, maybe there is somebody better than me”.

Don’t do that. If you don’t believe in yourself, why should others believe in you? And I would also say to women: work with other women. There is strength in a critical mass. I see it everywhere.

I see it at the Fund (IMF), I saw it at the World Bank, at the European Commission, when we have more women around the table, you can feel the energy in the room, and we make better decisions because we can provide different perspectives in those conversations.

So, step forward for yourself, for girls and women, for boys and men. Do your part for society!

For Sasha’s full report click on the video in the media player above

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Treasury Department’s hunt for Russian oil sanction violators on the seas is intensifying

Post By Oil and Gas business news, Crude oil markets, Government and politics, Kazan, Oil and Gas, Russia, Russia-Ukraine crisis, Sanctions and embargoes, shipping, Transportation and shipping, turkey, U.S. Department of the Treasury, United States, World economy

A Russian-chartered oil tanker in the sea off Morocco in an area identified by maritime technology company Windward as a hub for smuggling oil.

Europa Press | Getty Images

The U.S. Department of the Treasury’s Office of Foreign Assets Control announced three vessels and shipping companies being sanctioned for violating the Russian oil sanctions on Thursday, only a few days after Treasury began a separate, larger probe of approximately 30 ship management companies covering 100 vessels suspected of violating a price cap on Russian oil.

“Shipping companies and vessels participating in the Russian oil trade while using Price Cap Coalition service providers should fully understand that we will hold them accountable for compliance,” said Deputy Secretary of the Treasury Wally Adeyemo in a statement on Thursday. “We are committed to maintaining market stability in spite of Russia’s war against Ukraine, while cutting into the profits the Kremlin is using to fund its illegal war and remaining unyielding in our pursuit of those facilitating evasion of the price cap.”

But as the Treasury seeks to cut off the Kremlin’s access to oil profits, its hunt for crude tankers and shippers violating OFAC guidelines is revealing complexities in its own guidelines and a murky marine industry.

The shipping entities identified on Thursday were United Arab Emirates-based. The vessels were Kazan Shipping Incorporated’s Kazan, Progress Shipping Company Limited’s Ligovsky Prospect, and Gallion Navigation Incorporated’s NS Century. But while those ships are now UAE-based, Matthew Wright, lead analyst of freight at marine intelligence firm Kpler, tells CNBC the location of where the company is based may be different from the location of the beneficial owner. In this case, Wright says the beneficial owner is likely still Russian-based.

“Based on the history of these fleets, these vessels were all owned and operated by Sovcomflot,” Wright said. “Management of all the Sovcomflot ships was transferred to Sun Ship Management in March/April 2022 when their offices in Europe were closed. Those three companies are now managed by a new manager called Oil Tankers SCF Management but it’s just another name. Ownership hasn’t changed since 2006. They’re not part of either the dark or grey fleet really as I consider them still Russian-owned.”

30 ship owners targeted in new Treasury probe

This is just one example of the murkiness within the Russian oil trade. The probe against 30 shipowners begun earlier this week reveals how identifying and finding proof of vessels traversing the oceans with sanctioned oil is not as straightforward as suggested by initial headlines covering the Treasury allegations. These companies received warning letters from the government about activity deemed suspicious and requests for documentation. There are grey areas in the U.S. government’s Russian oil guidelines, though the efforts can ultimately lead maritime investigators to the truth.

In the U.S. Treasury’s “Preliminary Guidance on Implementation of a Maritime Services Policy and Related Price Exception for Seaborne Russian Oil,” ship owners are under a Tier 2 category. According to the Treasury, this group within the maritime industry are “actors who are sometimes able to request and receive price information from their customers in the ordinary course of business.”

If a ship owner is unable to obtain such pricing information, according to the Treasury’s guidelines, the Tier 2 actors (ship owners) need to request “customer attestations” where their charter customers pledge in a document they will not purchase seaborn Russian oil above the price cap.

This document could provide a “safe harbor” for ship owners who are relying on that customer’s “attestation” to comply with sanctions. This safe harbor is also extended to the ship insurance companies.

“Ship owners rely on the charterer to provide ample proof that the Russian oil on board the vessel has been sold below the price cap,” said Andy Lipow, president of Lipow Oil Associates. “The sanctions can easily be circumvented if a dishonest charterer presents documents that falsify the true cost of the oil.”

Lipow said one clue to suspicious paperwork is a price of oil that is well below the market, selling Russian crude oil in Asia today at $50 per barrel when Brent is trading at $80.

“That is a red flag,” Lipow said.

Based on the safe harbor, if the ship owner or management company can be absolved of wrongdoing, the documents can still lead Treasury to the charterer.

The U.S. Treasury told CNBC it does not comment on current investigations.

Tracking Russian oil

A breakout of the Russian oil trade by Kpler shows around 30% of Russian exports from Western ports are still using commercial shipping with beneficial ownership within the European Union.

Wright said this “dark fleet” is comprised of vessels typically 20 years and older which have loaded or predominantly loaded Venezuelan or Iranian cargoes in the last few years.

“There is often some evidence that they have been disguising their activities by turning off their AIS, but not in all cases,” said Wright, referring to the automatic identification system used by marine vessels to track location. “Ownership is often opaque and the operator does not engage in standard commercial shipping outside of operating these vessels.”

There are also “grey fleet” vessels sold since the Russian invasion of Ukraine with the aim of transporting Russian exports and avoiding sanctions. These vessels, according to Wright, have had EU ownership.

“Most vessels have been sold by owners based in Europe to owners who were not previously active in the tanker market,” he said. “The owners are based mainly in Hong Kong, China, India, and the UAE.”

The price cap rules state that exports of Russian crude or refined products on EU-owned, insured, or serviced tonnage must be below the relevant price cap.

Since July, Wright says most exports from Russia are assumed to be above the caps, yet a large number of ships from within the EU continue to trade. This is because of the way Russian crude is traded.

“It is very likely vessels loading Russian cargoes that are EU-owned will have documentation showing a crude trade below the price cap, even if the cargo was actually traded above the price cap,” Wright said. “This is because a charterer or middleman will have traded it at a price that can be shown to the owner as part of a wider trade with the final buyer. The (vessel) owner is unlikely to have any evidence to the contrary.”

Vessel owners do not produce these documents, he said, but are provided with these documents by the charterer.

“The vessel owners are merely the custodians of information provided to them,” Wright said.

Beks Shipmanagement & Trading confirmed to CNBC it is among the companies that received warning letters from the Treasury this week and is sending documents to the government. The company had been identified in earlier press reports, though Treasury declined to specify companies to receive letters.

In an email to CNBC, the company rejected the Treasury’s allegations. “Despite the fact that the U.S. Treasury Department requested voyage details from 30 different ship management including 100 vessels, it is an obvious bad faith and reputation damaging purpose that only our management company was mentioned in the news recently circulated in the media,” a Beks spokesperson wrote.

The company, based in Turkey, announced in October the deployment of SpaceX’s Starlink satellite connectivity system across its fleet of 40 bulkers and tankers for enhanced vessel tracking.

“Our vessels are traded worldwide with their tracking system always switched to the on position. We employ our vessels by abiding (by) all international laws and regulations without breaching any sanction regime,” the company wrote in the email.

Beks said it has been conducting due diligence procedures on all of its voyages as well as carrying out the necessary sanction checks with its London-based lawyers.

According to Kpler, Beks Shipmanagement’s fleet had numerous tanker port calls to Russia since the start of sanctions on February 24, 2022. One example is the oil products tanker Bek Aqua.

Kpler was able to track the travel of the tanker using the tanker’s satellite beacons through the AIS short-range coastal tracking system currently used on ships.

The tanker Beks Aqua arrived at the Russian Port of Nakhodka on Oct 26 and was loaded with either diesel or Naptha on November 1. The vessel then arrived at the Port of Singapore on November 10 and departed empty on November 14.

But following the satellite data doesn’t allow for understanding of contract prices.

“While we can track the vessel’s journey from Russia to Singapore, unless we have the sales contract, we do not know the price the oil product was purchased for,” Lipow said. “The only fact we have is companies like Beks Shipping are employed to move Russian oil. It is possible that someone filed false paperwork with the shipowner. This is why tracking the Russian oil sanctions is not straightforward,” he said.

Beks Shipmanagement said the requested voyage details will be provided to the U.S. Treasury with full transparency.

We're using sanctions to deny Russians the weapons they need, Deputy Treasury Sec. Wally Adeyemo

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Israel Hamas war: The outcome the financial markets expect

Post By World defence, Investment, Israel Hamas war, oil prices, U.S. dollar, World economy

Energy and defence-related investments are set to yield in the next 12-18 months, according to analysts.

Weeks after Hamas’s devastating attack on Israel – provoking fierce retaliation by Israel that has prompted fears of a humanitarian disaster in Gaza – the immediate shock that the assault had on the markets appears to be wearing off.

Yet given the huge impact that instability in the Middle East can have on the global economy, a pressing concern for investors arises: which investments would be a safe option amid the potential for escalated conflicts in the region?

BCA Research, a global investment strategy firm, wagers the answer lies in oil and defence-related investment.

The reason, their research shows, is that the war between Israel and Hamas is likely to spill over from Gaza’s borders, prompting a significant oil shock – a forecast that seems ever more possible following reports that the US military struck Iran-backed militias in Syria, in a self-proclaimed act of self-defence.

BCA Research has put the probability of the conflict drawing in Hezbollah and other militant groups in Lebanon and Syria at 45% by mid-October.

Indeed, on Monday morning, the Israeli Defense Forces confirmed that they had struck targets in Syria and Lebanon, in what it called a “response to launches from those areas into Israel”.

Matt Gertken, chief geopolitical strategist at BCA Research, said that there’s even a significant risk that the fighting will extend to bring Iran openly into the fray too, even if it’s unlikely on balance.

“The United States does not want a full-scale confrontation with Iran. They don’t want to interrupt the oil flow,” he said. “The Iranians also share an interest with the US. But it’s still at a one-third probability. It’s still a very high risk for the global economy.”

How oil and defence investments could outperform

With a potential escalation of the war on the cards, there’s a high risk of a major spike in oil prices within the next 12 to 18 months, according to BCA Research.

The war in Gaza won’t be the sole cause, the firm says: Russia, still ensnared in Western sanctions stemming from its continued invasion of Ukraine, is also likely to cut oil production.

“Constraints on the supply chain could push oil prices up,” said Gertken.

But oil isn’t the only market tapped to soar in value – BCA Research has also put its bets on the defence sector.

The chief strategist noted that the US is increasing defence spending to protect its allies, and Europe is also allocating more funds to defence, which are promising signs of increased profits for investors.

Gertken warned however that defence and energy stocks “should be viewed relative to other cyclical equities (stocks whose price is affected by how the economy performs, ed.)”.

As the current global economic outlook, including the IMF’s own, suggests a slowing GDP growth for the upcoming year, the so-called cyclical stocks are facing a weaker performance compared to 2023.

“Within this category, however, energy and defence stocks are likely to outperform,” said Gertken.

What does the market expect?

As news from Israel and Gaza continues to unfold, investors have been edging towards safe haven investments, such as gold and US treasury bonds.

Yet the impact of the war on the global financial markets and oil prices has been moderate so far.

The lack of volatile changes in the oil market is the result of two opposing effects.

Osama Rizvi, energy and economic analyst for Primary Vision Network, said that oil prices were on the verge of decreasing (due to a slowing of the global economy that reduced the demand for oil) just before the Israel Hamas war began.

Many large investors are still taking this outlook into consideration: Major hedge funds and money managers are channelling swathes of investment away from oil.

In the previous week, they slashed half of their long-term investments in oil, cutting down their contracts to purchase oil, from about 398 million barrels to about 197 million.

“This was the fastest rate this happened in the previous decade,” Rizvi said.

At the same time, oil prices were also pushed up by investors who put their bets on an escalating war in the Middle East – which would consequently limit supply and drive up prices further.

As for the next period, Rizvi suspects there will be no major surprises. Assuming the war stays confined to its current borders, he expects no more than a $3-4 rise in Brent oil prices.

However, if Iran enters the fray through a proxy war and seals off access to its 700,000 barrels of oil per year, there’s likely to be a $10 dollar jump, according to the analyst.

The third scenario is the most troubling: A full war involving major powers like the US, where Israel is in direct conflict with Iran.

“If that happens, according to Bloomberg economics, that has the potential to wipe out almost $1 trillion from the global GDP, essentially tipping the world economy into recession, and also the potential of oil prices to hit $150 or beyond that,” Rizvi said.

How this Middle East crisis differs from the others

Looking at previous crises in the Middle East, not everyone is convinced that the situation will truly escalate and put oil shocks on the cards.

However, there is a “major difference” now in geopolitics that makes the current war different from the ones that came before it, according to Gertken.

“I think probably the most underrated element of this conflict is that Iran has achieved nuclear breakout capacity. So it is a different Middle Eastern crisis this time around than in previous ones,” he said.

He explained that the underlying question from a strategic point of view is whether the US and Israel are willing to allow Iran to possess militant proxies or nuclear weapons that could impact the region.

“To put it simply, does Iran get to have nuclear weapons and Hezbollah, or do they only get to have one of those two things?,” Gertken said. “And that’s the reason why I think this is an important and dangerous juncture.”

How the global outlook is driving investors’ hands

Even if a potential conflict with Iran is contained, there’s still the looming possibility that the US economy will face recession in the next 12-18 months, according to BCA Research.

The firm expects headline or energy inflation to be too high to enable the US Federal Reserve (or Fed, the US central bank) to start cutting interest rates.

This, coupled with high energy prices, is squeezing demand and dragging the economy, Gertken explained.

One of the main indicators of whether the US is facing a recession – which Gertken expects to span from 2024 to early 2025 – is its unemployment rate.

“If the US unemployment rate starts rising over the next six months, the first thing it does is it tells investors that the US is going into a recession,” he said. “And we have a very high likelihood of Europe going into recession and we have a weak Chinese economy.”

Gertken also noted that the moment a possible recession takes place in the US can have a huge impact on the country’s election results and in turn global stability. He explained that a recession unfolding before the election would reduce the odds of the Democratic Party winning the re-election.

“What has the most impact for global stability is whether the US political party changes,” Gertken said.

What are the crisis-safe investments?

Rising geopolitical risks usually drive up the price of gold and the dollar – investors tend to almost automatically move their money into these assets because they’re prone to withstanding global crises.

Gold has long been resistant to geopolitical shocks and recently, in spite of the increase in real interest rates, it has remained relatively highly-priced.

Gertken said that one reason for this is that countries like Russia and China, who are positioning themselves for a trade confrontation with the US, are stocking up on gold.

“And that adds a tailwind,” he said.

Dollar investments could see temporary dips as the currency is trading inversely to oil, but fundamentally, they are considered to be a safe haven.

Currencies such as the Japanese yen and Swiss Franc are also solid choices in a crisis, as are US Treasury yields.

The bond market has recently seen a big sell-off but Gertken believes that these investments will start attracting more money flows.

“I think bonds can actually do fairly well because inflation is falling,” he explained. “I do think bonds are still havens and I think in particular developed market bonds, and the US would be included in that category.”

For investors, looking beyond the next 12 months, commodities could also bring good yields. Silver and copper, suggests Rizvi, are potentially good investments, adding that these two generally see increasing demand and rising prices when economies do well.

“Given the condition of the global economy, if one takes a position in copper, on the downward direction, that can give you good yields moving forward,” he said. “Because all of this (the current limited economic growth, ed.) will have to unwind at some point in 2024 or 2025 when the Fed starts to unwind their monetary policy.”

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How the Israeli-Hamas war affects financial investments

Post By World defence, Investment, Israel Hamas war, oil prices, U.S. dollar, World economy

Energy and defence-related investments are set to yield in the next 12-18 months, according to analysts.

BCA Research, a global investment strategy firm, wagers the answer lies in oil and defence-related investment.

The reason, their research shows, is that the war between Israel and Hamas is likely to spill over from Gaza’s borders in the next 12 months, prompting a significant oil shock – a forecast that seems ever more possible following reports that the US military struck Iran-backed militias in Syria, in a self-proclaimed act of self-defence.

BCA Research has put the probability of the conflict drawing in Hezbollah and other militant groups in Lebanon and Syria at 45%.

Matt Gertken, chief geopolitical strategist at the firm, said that there’s a significant risk that the fighting will extend to bring Iran openly into the fray too, even if it’s unlikely on balance.