【Major Bank Perspective】Exclusive Interview with Allianz Investment's Greg Hirt: Don't Just Focus on Middle East Conflict Risks, But Also Capitalize on Oversold Opportunities

The ongoing tension in the Middle East continues to shake the global financial markets. Greg Hirt, Chief Investment Officer of Allianz Global Multi-Asset, told this newspaper that compared to past conflicts with Israel, the current Middle East war has suddenly become closely linked to the global situation. The investment market now reflects the logic of “risk” and “opportunity” coexisting. “If you have cash reserves, now is a good time to act.”

The current situation is like being inside a washing machine

Allianz Investment stated that the Middle East conflict is expected to last about 3 to 4 weeks, so the market may still have room to decline further. “Right now, it’s like being inside a washing machine, going through the wash cycle, and everyone starts to panic. But this is often the time when you need to re-enter the market. Generally, the hardest part inside the washing machine is the first one to two weeks.”

He pointed out that the market can see more clearly Iran’s capabilities and whether they can withstand longer-term impacts within the first two weeks. It can also see how quickly the U.S. hopes to find a solution and how fast they are prepared to return to negotiations. “Even if Donald Trump claims he won’t negotiate, based on what he hears from different channels, others seem willing to discuss.”

“Looking at historical experience, external shocks often present good entry opportunities, allowing investors to review previously attractive assets or regions. It is expected that the market will move in a more positive direction in the next two to three weeks. Therefore, current focus should not only be on risks but also on the oversold opportunities in the market to rebalance investments that were previously difficult to acquire due to high prices.”

Focus more on 6 to 12-month crude oil futures trends

With geopolitical tensions high, oil prices have risen above $100. Greg Hirt said that as market volatility and risks increase, the rise in oil prices tends to be larger. However, he is more focused on the 6 to 12-month crude oil futures trend. If the 12-month futures show greater volatility, it could indicate that the market is beginning to expect a longer-lasting Middle East conflict.

However, he believes that global oil supply is currently oversupplied, so there is no need to increase production immediately. Most countries’ oil reserves are already sufficient, and the speed of oil production and distribution is very fast. If supply needs to catch up with demand, it can be done quickly. Compared to oil, he is more concerned about natural gas prices.

De-dollarization process slows, central banks increase gold reserves

“Natural gas prices are relatively more sticky, rising and falling more slowly, which significantly influences long-term inflation expectations. In the long run, its impact on global prices is much higher than oil. Therefore, natural gas prices are likely the focus of global central banks.”

Regarding gold, Greg Hirt said he has been quite optimistic about gold over the past two and a half years. This is mainly due to the slow progress of the long-term de-dollarization process. Central banks around the world are increasing gold reserves. However, currently, no currency can replace the dollar. Additionally, after a significant rise in gold prices, the gap between the price and fundamental factors has widened, so he has slightly lowered his positive outlook on gold.

Greg Hirt also remains optimistic about the AI story: 【No worries about AI bubble, optimistic about Taiwan and Korea stocks】

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