Oversea-Chinese Banking(US:OVCHY) Xin Hua Cai Jing·2025-06-17 05:04Core Viewpoint - The report from OCBC highlights that despite escalating conflicts between Israel and Iran raising investor concerns, the overall market reaction remains measured without panic [1]. Market Reaction - The conflict marks the first large-scale public engagement between Israel and Iran, leading to worries about potential regional war [1]. - On the last Friday, gold prices increased by 1.5%, while the S&P 500 index saw a slight decline of 1%, indicating a moderate overall drop in the market [1]. Oil Price Concerns - A significant concern for the market is the potential impact of the conflict on oil prices, with oil prices rising sharply last Friday [1]. - There are fears that Iran may target the Strait of Hormuz, a crucial oil passage, with an Iranian commander stating that Tehran is evaluating the possibility of closing the strait [1]. - The Strait of Hormuz is vital, with approximately 20 million barrels of crude oil and petroleum products passing through daily, accounting for about 20% of global oil transport [1]. Analyst Skepticism - Analysts express skepticism regarding Iran's likelihood of closing the Strait of Hormuz, noting that China, which accounts for three-quarters of Iran's oil exports, may oppose such actions [2]. - Iran has previously made similar threats in 2011, 2012, and 2018 but has never followed through [2]. - While Iran may resort to attacking tankers or laying mines in the strait, there are concerns that such actions could provoke a strong response from the U.S. military stationed in Bahrain [2]. Market Outlook - If the conflict does not severely disrupt global oil supplies, market panic may gradually ease [3]. - OCBC advises investors to maintain a long-term perspective during market volatility and to consider increasing allocations in quality stocks and Asian investment-grade bonds to navigate uncertainty and seize potential buying opportunities [3].