Stubbornly high oil prices are likely to drag on consumer spending and corporate margins in the medium term, says Toh in his March 16 report.
CGS International (CGSI) analyst Billy Toh remains “broadly constructive” on Asian equities despite rising geopolitical risks following the US-Iran conflict. However, he now recommends a more “cautious and tactical” investment approach.
On Feb 28, the US and Israel launched a coordinated attack on Iran, prompting retaliatory strikes on key infrastructure nodes, including the blockage of the Strait of Hormuz, disrupting about a fifth of the world’s daily oil trade. The disruption, which has led to surging oil prices, means the US Federal Reserve (US Fed) is unlikely to cut interest rates in the near term amid inflationary pressures.
