Market update on the Iran war and portfolio alignment

A crucial factor for the capital markets is the situation at the Strait of Hormuz, the world's most important energy route. Shipping traffic there has largely come to a standstill since the attacks. The price of oil has almost doubled since the start of the war. Rising energy costs are impacting industry, logistics, and consumer spending, fueling concerns about renewed inflation.

Further developments in the Middle East remain unpredictable, as the conflict is influenced by numerous political actors and the overarching military objectives of the US and Israel are not clearly defined. In a positive scenario, US President Trump could announce that the military objectives have been achieved and cease hostilities. Provided Iran also halts its attacks, this could lead to a swift end to the conflict. In this case, capital markets would rebound sharply and the price of oil would fall rapidly. The worst-case scenario: Hostilities continue, the situation escalates further, and an end to the conflict remains elusive. This would mean that the stock market continues to fall and the price of oil rises.

We have had a very good start to the new year with our asset management mandates, as you can see from the asset statements you already received at the end of February. While the funds have experienced losses since February, they are still significantly positive. In light of the current situation, we reduced the equity weighting in VM 1 to 44% last week (62% in VM 2). Even before the outbreak of the conflict, we had increased our investments in energy sector stocks, which can benefit from rising oil prices. Given our cross-asset diversification across bonds, liquid alternative investments, and gold, we believe our portfolios are currently well-positioned for various scenarios. We are closely monitoring further developments so that we can react promptly to any changes in the situation.