[비즈한국] Tensions surrounding the Strait of Hormuz are evolving beyond simple geopolitical events into a turning point that is altering the 'basic variables' of the global market. With the peace negotiations between the U.S. and Iran in Islamabad, Pakistan, ending without results, financial markets are once again engulfed in uncertainty. The problem is that this uncertainty is no longer a temporary shock, but is operating in a way that shifts the very premises of the market.
The Strait of Hormuz is becoming a 'space where prices are determined.' Currently, ships passing through this waterway must be under the control of the Iranian Revolutionary Guard Corps (IRGC), and transit volume has plummeted to about 10% of pre-war levels. Furthermore, with demands for tolls reaching millions of dollars per ship, energy is being redefined no longer as a freely traded commodity, but as a strategic asset under political control. The structure where the market determined prices through supply and demand is now shifting to a system where military and political control dictate prices.
Such shocks are already penetrating deep into the real economy. The aftermath of high oil prices has shattered consumer sentiment, the most sensitive indicator of the U.S. economy. The University of Michigan Consumer Sentiment Index for April stood at 47.6, the lowest level since tracking began in 1978. This means it is not just an economic slowdown, but that the very foundation of consumption is being shaken. Additionally, the Consumer Price Index in March rose 0.9% from the previous month, reaching its highest level in four years. Energy-driven price pressure is becoming a reality.
The U.S. economy is currently entering the initial phase of typical stagflation, where consumption slows while prices rise. This is the most uncomfortable scenario for financial markets. This is because it is an environment where interest rates cannot be easily lowered, and growth is difficult to expect.
The market is searching for clues to gauge the direction of monetary policy. With the confirmation hearing for Kevin Warsh, the nominee for the next Federal Reserve Chair, originally scheduled for the 16th, being postponed, the market has even lost its benchmark for policy judgment. The core questions—how to interpret inflation originating from the Middle East and whether interest rate cuts are possible in an environment of high oil prices—remain unanswered and deferred.
This carries more significance than a simple schedule change. It is a signal that even the most important price variable, 'interest rates,' has now begun to be influenced by politics and events rather than just data. If controversy over the Fed's independence is added to this, the market will reflect an additional risk premium called 'policy uncertainty' into prices.
However, not all trends are negative. Interestingly, while the U.S. is wobbling, different signals are being captured in emerging markets, led by China. China's producer price index in March turned upward for the first time in three and a half years, suggesting the possibility of escaping deflation. This can be interpreted not just as a rebound in indicators, but as a signal that the global demand structure is recovering in some areas.
In fact, expectations for China's economic improvement are leading to the strength of the yuan and the Australian dollar, and South Korea's exports to China are also showing signs of a rapid recovery. This means that while risks are emerging from the Middle East, opportunities are being created in Asia.
Investment strategy is now moving from the question of 'what to add' to 'what structure to adopt.'
First, one must pay attention to the fact that correlations between assets are breaking down. In the existing market, stocks and bonds complemented each other, but now, with interest rates, prices, and geopolitical risks moving simultaneously, the traditional diversification effect is weakening. This means that risks cannot be reduced by simply dividing assets. Future portfolios need to be reconstructed based on 'risk factors' rather than asset classes. The key is to examine exposure to each variable, such as interest rates, exchange rates, and raw materials.
Also, one must read the 'direction of the flow' rather than price volatility. The current market is closer to the beginning of a major trend shift than a short-term fluctuation. In particular, energy and raw materials may see their long-term price bands rise based on changes in the global supply structure rather than being swayed by short-term spikes. This is not the realm of trading but the realm of responding to cycles, and an approach focused on medium-to-long-term allocation strategy is becoming more effective than short-term trading.
Finally, one must realize that 'positioning' has become more important than 'timing.' In the past, how well one timed the bottom determined performance, but now, where one is positioned is more important. In a phase of high volatility, the direction of exposure often determines profit more than the entry point. In particular, positioning in assets linked to exchange rates, raw materials, and global demand flows is highly likely to determine future performance. In an environment where familiar investment formulas no longer work, investors who establish new criteria first will have the advantage. The market is still shaky, but within that shaking, a new order is already being formed.