As the Middle East conflict slows growth and fuels inflation, capital is moving toward safe havens. Success in this climate requires strict caution and disciplined asset allocation. Capital flows shift as conflict escalates The military conflict in the Middle East is weighing on global financial markets and investment channels. On the second day of the fighting, Iran struck a well-known hotel in Dubai in the United Arab Emirates (UAE) — an oil gateway and global financial hub — sending shockwaves beyond the movement of capital and goods. Currency markets are reacting. International analysts expect the U.S. dollar and the Swiss franc to strengthen, while currencies of energy-importing economies may depreciate sharply. “This creates unfavorable dynamics in international relations and could accelerate shifts in the global economic and financial order, with uncertain directions ahead,” said economist Vu Dinh Anh. As supply shocks stifle growth and fuel inflation, capital naturally moves toward safe-haven markets. “Dubai’s role as a financial hub could be undermined immediately. Oil revenues and the large sovereign funds of Abu Dhabi and Dubai could be frozen and unable to operate. That would fragment global investment flows,” he said at a seminar on the Middle East conflict on March 3. […]
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