New long-range missiles battering Ukraine and Russia. Vladimir Putin’s nuclear threats. Ballistics may cease in Lebanon, but continue in Gaza. Many worry a wider European war or Iran’s re-engagement threaten this bull market.
No. Markets have already proven they can shrug off these conflicts. My 2025 forecast is still cooking, but these wars aren’t reason to fear a bear market.
Let me explain. Bear markets form two ways: on top of the “wall of worry” in euphoria – when super-high expectations make markets susceptible to any material new negative – or when a new huge, multi-trillion dollar negative surprise wallops us.
Today’s regional wars are neither. They weigh on sentiment, keeping euphoria at bay – and aren’t wallops. They are horrendous. But they are no surprises.
Russia’s war with Ukraine is nearly three years old. Israel’s most recent salvo against Hamas started more than a year ago, with worries over it spreading to Lebanon and Iran bubbling the whole time.
There is nothing on either front stocks haven’t weighed. Markets dissected both … and continued clocking record highs. They priced the potential cost of it all and moved on.
War is a terrible human tragedy, always. Our society rightly hates and laments destroyed lives and property.
But stocks are unemotional – heartless. They simply fathom the economic cost. Will a conflict affect a large enough swath of the global economy to erase a few trillion dollars’ worth of gross domestic product? If not wallop-sized, the conflict isn’t bear market fuel.
There are – sadly – abundant examples. The Korean War. The six-day war of 1967. Iran-Iraq. The Bosnian war of the 1990s that erupted in Europe’s long-feared “powder keg”. Iraq in 1991 and 2003. Syria in the mid-2010s. Russia’s 2014 seizure of Ukraine’s Crimean territory.
All stoked fear. None triggered a bear market. Some drove volatility – usually before conflict started. But that typically passed when fighting began. Stocks hate the uncertainty mounting tensions bring more than regional conflict itself. Hence, the age-old market adage: “Sell on the fear; buy on the bullets.”
Historically, only world wars have swayed stocks materially. Early era inaccurate data suggest the First World War had a nasty bear market bite. Better S&P 500 and FTSE all-share data show the Second World War's outbreak in Europe caused a brutal bear market.
But these are the only two times war and war alone was a bear market’s proximate cause. And why? Because they hugely disrupted the global economy.
Perhaps 2022 looks like a counterpoint. Russian President Vladimir Putin invaded Ukraine that February, early in the January 3 to October 12 bear market. But fighting alone didn’t cause stocks to decline.
Rather, it was one of many fears stinging investors like a swarm of bees. There was the fear of sanctions, Covid’s lingering supply chain disruptions, central banks facing interest rate hikes and European energy shortage fears that pre-dated Ukraine fighting. All took turns stinging again and again, cycling in and out multiple times.
How do you know the swarm of morphing fears, and not the war itself, caused the bear market? Simple: The stocks told us.
There was no peace when the new bull market began that October 13. But stocks rallied through to the end of 2022, 2023 and now 2024. This happened even as both sides dug in, casualties mounted and cities were levelled.
The cold truth is that Ukraine is just 0.16 per cent of global GDP – nowhere near enough to render a recession in a global GDP of over $110 trillion.
Israel’s war with Hamas shows this, too. Here, stocks followed their normal pattern, wobbling in the run-up to fighting as uncertainty surged, then moving on as war broke out and its limited scope became clear.
We saw, quickly and clearly, fighting stayed local, confined to tiny slivers of world GDP. Natural gas supply disruptions were short. After a drop in the fourth quarter of 2023, Israel’s GDP rebounded. Markets rightly rallied.
Stocks move most on the gap between expectations and subsequent realities. Regional conflict lowers expectations, widening the gap – creating more bullish positive surprise as things don’t go as badly as many feared.
Twice this year, Israel traded fire with Iran, stoking fears of major, potentially global escalation. But fears proved false and stocks rallied promptly.
The Houthi militia’s attacks on Red Sea oil tankers roiled sentiment, sparking fear of 2022-style supply disruptions. But these too proved false.
Brent crude oil closed at $87.86 on October 6, 2023 – the day before Hamas’s attack on Israel triggered the war. It now sits at about $75, telling you everything you need to know. All this happened before November 26’s Lebanon ceasefire fuelled hopes of broader peace.
So, while this bull market isn’t risk-free, well-known regional conflicts aren’t a trigger for a bear market. Rather, they are bricks in the wall of worry and stocks normally climb until worries subside and euphoria reins. Stocks spent all year telling you this. Trust them.
LIKELY TEAMS
South Africa
Faf du Plessis (captain), Dean Elgar, Aiden Markram, Hashim Amla, AB de Villiers, Quinton de Kock (wkt), Vernon Philander, Keshav Maharaj, Kagiso Rabada, Morne Morkel, Lungi Ngidi.
India (from)
Virat Kohli (captain), Murali Vijay, Lokesh Rahul, Cheteshwar Pujara, Rohit Sharma, Ajinkya Rahane, Hardik Pandya, Dinesh Karthik (wkt), Ravichandran Ashwin, Bhuvneshwar Kumar, Ishant Sharma, Mohammad Shami, Jasprit Bumrah.
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
TRAP
Starring: Josh Hartnett, Saleka Shyamalan, Ariel Donaghue
Director: M Night Shyamalan
Rating: 3/5
MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports
What is a robo-adviser?
Robo-advisers use an online sign-up process to gauge an investor’s risk tolerance by feeding information such as their age, income, saving goals and investment history into an algorithm, which then assigns them an investment portfolio, ranging from more conservative to higher risk ones.
These portfolios are made up of exchange traded funds (ETFs) with exposure to indices such as US and global equities, fixed-income products like bonds, though exposure to real estate, commodity ETFs or gold is also possible.
Investing in ETFs allows robo-advisers to offer fees far lower than traditional investments, such as actively managed mutual funds bought through a bank or broker. Investors can buy ETFs directly via a brokerage, but with robo-advisers they benefit from investment portfolios matched to their risk tolerance as well as being user friendly.
Many robo-advisers charge what are called wrap fees, meaning there are no additional fees such as subscription or withdrawal fees, success fees or fees for rebalancing.
More from Janine di Giovanni
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
MATCH INFO
RB Leipzig 2 (Klostermann 24', Schick 68')
Hertha Berlin 2 (Grujic 9', Piatek 82' pen)
Man of the match Matheus Cunha (Hertha Berlin
What is the definition of an SME?
SMEs in the UAE are defined by the number of employees, annual turnover and sector. For example, a “small company” in the services industry has six to 50 employees with a turnover of more than Dh2 million up to Dh20m, while in the manufacturing industry the requirements are 10 to 100 employees with a turnover of more than Dh3m up to Dh50m, according to Dubai SME, an agency of the Department of Economic Development.
A “medium-sized company” can either have staff of 51 to 200 employees or 101 to 250 employees, and a turnover less than or equal to Dh200m or Dh250m, again depending on whether the business is in the trading, manufacturing or services sectors.
Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
