Amidst volatility from Middle East conflict and soaring energy prices, Australian companies are staging unexpected rallies. While the nation’s oil and gas giants have emerged as clear beneficiaries, investors are actively seeking out businesses positioned to thrive either directly or indirectly from the geopolitical tension. The Australian sharemarket saw a temporary surge earlier this week, fuelled by hopes of a ceasefire reopening the crucial Strait of Hormuz. However, the S&P/ASX 300 has shed 3 per cent since the US strike on February 28, indicating a challenging broader market environment, though some firms are defying the trend.
Experts point to indirect beneficiaries in secure supply chains and elevated inflation. Lynas Rare Earths produces minerals essential for high-tech products, green energy, and defence. As the only meaningful separated rare earth producer outside China, its strategic value has increased, leading to strong share performance alongside Iluka Resources. Agribusiness GrainCorp is winning as the Strait of Hormuz closure threatens rival supply chains, pushing grain prices up. Insurers like QBE Insurance and Suncorp are outperforming, earning more interest on their ‘free float’ as the RBA raises rates. Local chemical producers like Redox, an Australian supplier, are also profiting from observed price inflation across many chemicals, a shift after decades of falling prices.
In the digital realm, cybersecurity stocks like Palo Alto Networks and CrowdStrike are delivering strong returns as state-linked cyberattack risks grow, emerging as non-obvious beneficiaries. Perhaps most surprisingly, Commonwealth Bank has emerged as a safe-haven asset. Despite investor caution around banks, its shares have climbed while other major lenders have seen declines. This reflects a ‘flight to quality’ by investors viewing the country’s largest bank as well-capitalised amid uncertainty.
