US Involvement in the Middle East Conflict! How to Deploy Investment Strategies in "Troubled Times"?

On June 22 local time, U.S. President Trump claimed that the U.S. military "successfully struck" and "completely eliminated" three Iranian nuclear facilities, escalating tensions in the Middle East.

As one of the response measures, the Iranian parliament believes the Strait of Hormuz, which handles about one-third of global maritime crude oil trade, should be closed; however, this action awaits approval from Iran's Supreme National Security Council. Analysts believe that the global commodity and financial markets will be significantly impacted.

According to a research report by CITIC SEC, the level of U.S. involvement determines the performance of U.S. stocks.

When the U.S. is not directly involved in a war, Middle Eastern conflicts tend to cause emotional disturbances to U.S. stocks only in the initial 1-3 weeks of war, with subsequent corrections usually occurring within a week.

In wars where the U.S. is directly involved, the trend of U.S. stocks is closely related to the U.S. involvement level and the progression of the war, often declining initially due to risk aversion and correcting once the situation becomes clearer.

As the conflict in the Middle East escalates, the overall performance of the US stock market has been relatively turbulent. So, in these 'chaotic times', how should investors deploy their investment strategy? The market generally believes that this round of Middle Eastern conflict highlights four important areas - Energy, Gold, Military, and Uranium mines.

1. NENGYUANHANGYE

• Oil and gas stocks

The United States launched airstrikes on Iran's nuclear facilities, raising market concerns over escalating tensions in the Middle East and potential disruptions to energy supply. International oil prices surged on Monday (June 23) in early trading, briefly rising more than 4%, reaching a five-month high since January this year.

Analysts point out that even if Iran does not take extreme measures to close the Strait of Hormuz, merely signaling its ability to disrupt this shipping route could raise maritime costs, thereby affecting supplies of Crude Oil Product and Henry Hub Natural Gas.

Therefore, oil and gas stocks in the U.S. stock market are worth investors' attention, including $Exxon Mobil (XOM.US)$ 、 $Chevron (CVX.US)$ 、 $Shell (SHEL.US)$ 、 $TotalEnergies (TTE.US)$ and so on.

• nuclear energy stocks.

The attack on Iran's nuclear facilities has triggered market panic over the risk of nuclear leakage. If the risk of nuclear contamination spreads, it is bound to provoke a regional and even global response to National Security, which serves as a bullish catalyst for environmental monitoring, pollution remediation, radiation detection, and other niche companies.

Honeywell in the U.S. stock market plays the role of a technology provider in the field of radiation.

The Fukushima nuclear power plant leak in 2011 was classified as the highest level 7 nuclear accident (major accident), causing the entire human society to fall into crisis. Honeywell acted accordingly, and its related radiation monitoring products have played a significant role in many industries, becoming a 'watchman' for human safety.

Furthermore, the heightened Middle Eastern conflicts have intensified global concerns over energy security, and the risk of disruption in the supply of traditional fossil fuels (such as oil) may prompt countries to turn towards clean energy. Nuclear power generation, due to its strong stability and low carbon emissions, is becoming an important energy option.

It is noteworthy that on May 23, President Trump signed four executive orders aimed at accelerating the construction of nuclear power in the United States. Among them, the most eye-catching is the goal of achieving 400 gigawatts of nuclear power capacity by 2050, which would quadruple the current operating capacity of 100 gigawatts in the U.S.

In the U.S. stock market, the nuclear power concept stocks are among the... $Honeywell (HON.US)$ 、 $Constellation Energy (CEG.US)$ 、 $Vistra Energy (VST.US)$ 、 $Oklo Inc (OKLO.US)$ They are worth paying attention to.

II. Gold Stocks

The saying goes, 'In prosperous times, antiques are valuable; in chaotic times, gold is precious.'

According to a Research Report from CITIC SEC, regarding gold, the risk aversion sentiment often begins to catalyze on the eve of war, and after the war starts, two price trend patterns emerge. For conflicts that have market expectations before the war, gold prices often spike and retreat on the first day of conflict. For conflicts that lack market expectations prior to the war, gold prices typically reach a short-term peak about ten days after the war begins, then decline in phases as the situation clarifies. Over a longer time frame, with the U.S. shifting towards strategic contraction and rising instability in international relations, geopolitical factors will provide a long-term persistent catalyst for gold.

Therefore, gold stocks in the U.S. stock market such as $Newmont (NEM.US)$ 、 $Agnico Eagle (AEM.US)$ 、 $Wheaton Precious Metals (WPM.US)$ 、 $Barrick Mining (B.US)$ Recently, new highs have been set for the year.

3. Military and National Defense Fields

As geopolitical conflicts escalate, the demand for military equipment in the Middle East may continue to grow, while Europe and the United States are also increasing military investments, which may restart a new arms race.

Additionally, the NATO summit will be held in The Hague, Netherlands, from June 24 to 25, with the main topic being the discussion of raising member countries' defense spending targets from 2% of GDP to 5% of GDP, with 3.5% allocated for core defense and 1.5% for related areas (such as cybersecurity and infrastructure). If implemented, this will trigger a wave of military expenditure expansion for European and NATO countries.

Specifically, in the aerospace and defense sector, $GE Aerospace (GE.US)$ and aircraft engine manufacturers. $RTX Corp (RTX.US)$ 、 $Boeing (BA.US)$ Manufacturers of F-35 fighter jets, core suppliers of NATO. $Lockheed Martin (LMT.US)$ In terms of military drones, missile defense system manufacturers, military drones, and autonomous defense systems. $Northrop Grumman (NOC.US)$ Small tactical drones and guidance systems. $AeroVironment (AVAV.US)$ Military tactical drones and simulation systems. $Kratos Defense & Security Solutions (KTOS.US)$ Commercial/military drones and video analysis platforms. $Red Cat Holdings (RCAT.US)$ All of these are worth paying attention to.

In addition, cyber warfare has become a key part of modern warfare, thus defense data analysis. $Palantir (PLTR.US)$ Cybersecurity companies. $Palo Alto Networks (PANW.US)$ 、 $CrowdStrike (CRWD.US)$ 、 $Fortinet (FTNT.US)$ Looking forward to investment opportunities.

IV. Uranium Mining Stocks

Iran is a country rich in uranium resources, and its uranium production accounts for a certain proportion of the total global output. Attacks may lead to a reduction in Iran's nuclear material exports, driving up global uranium prices. Based on this, uranium mining stocks may attract funding, especially in the US stock market. $Cameco (CCJ.US)$ 、 $NexGen Energy (NXE.US)$ 、 $Centrus Energy (LEU.US)$ 、 $Uranium Energy (UEC.US)$ and so on.

Cameco is one of the world's leading uranium producers and a leading supplier of uranium refining, conversion, and fuel manufacturing services. The company has substantial proven and probable mineral reserves, with operations covering the entire nuclear fuel cycle from exploration to fuel services.

NexGen Energy is focused on developing advanced nuclear fuel technology and has significant potential for development in the nuclear power sector.

Centrus Energy is one of only two licensed commercial producers of low enriched uranium in the United States and the only company that can provide low enriched uranium to the U.S. government to meet national security needs.

Centrus focuses on nuclear fuel supply and related technology services, leading in the production of low enriched uranium (LEU) and high-assay low enriched uranium (HALEU). The company operates through two main business divisions: the Low Enriched Uranium division responsible for the distribution and production of nuclear fuel, supplying low enriched uranium nuclear fuel to commercial customers and the U.S. government; and the CTS division provides uranium enrichment and technical services to support national security missions and future nuclear energy development, particularly in the next-generation small modular reactor (SMR) and micro-reactor markets.

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