Investing in a Conflict‑Driven World
Temps de lecture : min
The events of the past weekend confirm our long‑standing assessment of a more conflictual and less cooperative world, as outlined for several years in our Economic and Financial Outlook.
This global environment remains central to our asset‑allocation framework. Beyond the critical issues of growth and inflation, today’s geopolitical landscape reinforces States’ needs for sovereignty and the strategic priorities that follow—defence, infrastructure, and access to resources.
The conflict, which has now entered a new phase, once again highlights the challenges facing governments: protecting populations and infrastructure, securing supply chains and production capacity, and managing the risks of disruption.
In the very short term, the blockade of the Strait of Hormuz and the threats to energy infrastructure represent the main economic risks that could destabilize the global economy. With 20% of global LNG production and 15 to 20 million barrels of oil transiting through the strait each day, the potential for economic disruption is real. However, the economic shock could remain contained, given the fossil‑fuel reserves accumulated by major energy‑dependent economies (China, for instance, took steps in October 2025 to expand its strategic petroleum reserves). Over the medium to long term, the integrity of oil infrastructure in the Gulf region will be key to assessing the risk of broader global economic disruption. At this stage, although material damage remains limited, Iranian drone strikes on refineries—and potentially desalination plants—in Qatar and Saudi Arabia nonetheless represent major concerns.
A prolonged blockade of the Strait of Hormuz or significant damage to infrastructure could push oil prices toward the upper end of our scenario range, exceeding $100. The resulting impact on growth and inflation would be substantial, posing a major downside risk for equity markets.
In any case, we continue to argue that this environment is structurally more inflationary—driven both by the increased regionalisation of trade in a less cooperative world and by the imperative to secure access to critical resources. As a corollary, governments are deploying large‑scale investment plans to rebuild and safeguard their energy, transport, and communication infrastructure—key pillars of long‑term growth support.
Against this backdrop, we maintain an investment strategy structured around two main dynamics: on one side, an inflationary environment and rising sovereign financing needs that argue for a steepening of yield curves; on the other, equity markets that should remain supported by specific structural themes. In this respect, we continue to prioritise four major cross‑sector themes: defence, critical resources and infrastructure, and automation.
In the face of heightened volatility in the coming days and potentially weeks, Covéa Finance’s teams stand ready to capture long‑term opportunities that may emerge.
Written by
Vincent HADERER
Head of International Equity Management
