Our head trader has been on a well deserved leave this week, and as a result, we haven’t had any morning calls to report on since March 27th. Today we have compiled a report on a few developments in geopolitics and their effects, which we feel is particularly worth keeping an eye on. We expect a return to the daily updates from Tuseday next week, April 7th!

The Red Sea

As the war in the Middle East continues, the Houthis have intensified their attacks on ships passing through the Red Sea, further straining the global economy. The Bab-el-Mandeb strait is an economic chokepoint between Europe and Asia. Approximately 12-14% of global trade—including 9% of global oil demand in 2023—flows through it. This further hampers Saudi Arabia’s ability to export petroleum to its largest customers in Asia, as oil tankers and merchant ships trying to avoid the area are forced to circumnavigate the entire continent of Africa. This route adds an approximate 10-14 days to their journey and contributes to higher operating costs, insurance premiums and slower deliveries.

China

Despite disruptions in the global market and increased oil prices caused by the recent conflicts, China’s industry has returned to a modest state of growth since January of this year. China is the world’s largest producer of rare-earth minerals, and it sits on the largest strategic oil reserves, estimated to last for 6 months. This combination affords China a great deal of flexibility that seems to allow Beijing to capitalize on the increased demand for batteries, semiconductors and solar panels in Europe, India, and others.

China’s factory growth since 2023. Taken from Reuters

The magic happens in our community!

We’re posting on TradingView, we’re posting on our blog… but the real magic happens in our client community where you can get access to our ideas as they develop. So, open your account and join us and start taking advantage of South Africa’s Top Broker for both Active Traders and Traditional Investors. We have a Discord server, with a Daily Morning Call at 08:30 (Monday – Friday), where our Trading Strategist shares market updates and posts information with the Community. If you are not trading with us yet, what’s stopping you?

*Please note that these trade ideas form part of a larger weekly plan and the value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. The risk of loss arising from trading in Contracts for Difference can be substantial. You should carefully consider whether such investments are suitable for you in the light of your circumstances and financial resources.