05-03-2026 • Insight

Middle East conflict: Market commentary (week of March 2)

Welcome to our blog with in-depth analysis and reactions as the impact of the conflict in the Middle East continues to unfold. This is an evolving situation carrying a great deal of uncertainty as the extent and duration of the conflict is yet unknown. Our aim is to keep you informed of our views as events develop.

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THURSDAY, MARCH 5

12:00 CET
Quant Equities: Global markets start pricing-in inflation concerns
By Rob Huisman, Client Portfolio Manager
Market developments
Since our last update on 3 March, market volatility has continued across global equity markets. Heightened inflation concerns linked to the Middle East conflict have driven a broad rotation away from risk assets. The South Korean equity market has been particularly affected, recording a double-digit decline after a very strong start to 2026. This correction largely reflects the result of risk-off sentiment and profit-taking following earlier gains, rather than a direct impact from developments in the Middle East.

The conflict has led to airspace closures across parts of the Gulf, disruptions to transport and commercial activity, and heightened uncertainty around regional stability. With reciprocal actions continuing and no clear diplomatic resolution yet in place, markets are likely to remain sensitive to further developments in the near term.

Heightened uncertainty typically leads to more cautious investor positioning, with a potential shift toward a short-term risk-off environment across equities and other risk assets. Due to increased probability of tensions persisting, markets are starting to price in increased impact on inflation. The risk-off environment has particularly hit markets that had the strongest start of 2026 – South Korea.

As discussed in our previous update, emerging markets may continue to experience more pronounced reactions, particularly those in geographic proximity to the region, as investors reassess geopolitical exposure and capital flows. In parallel, energy markets and transport routes remain an important channel to monitor, given the strategic relevance of the Gulf region for global trade and energy supply.

Portfolio positioning
Markets continue to react to headline risk and scenario-driven uncertainty as the conflict unfolds. Our investment teams continue to closely monitor developments with full human oversight of all trading and positioning.

Robeco’s proprietary portfolio construction algorithm focuses on bottom-up stock selection while employing a risk framework that limits exposure to country and sector risks. Our Quant strategies maintain limited active exposure to Middle East names and the Energy sector, effectively muting the impact of market downturns.

WEDNESDAY, MARCH 4

15:30 CET
EM Fundamental Equities: Korea sell-off could yield long-term opportunity
By Jan de Bruijn, Client Portfolio Manager
South Korea’s sharp equity market sell-off in early March 2026, following the US and Israeli strikes on Iran, reflects a ‘perfect storm’ of underlying vulnerabilities. While the latest bout of Middle East instability is weighing on global risk assets, Korea is particularly exposed due to its energy dependency – importing almost 98% of its fossil fuels – and a high share of foreign capital in its tech heavy market. At the same time, the KRW has weakened markedly, heightening the risk of imported inflation. As a result, Korean equities have been among the hardest hit by the global risk off shift and the surge in oil prices, with major names such as Samsung Electronics and SK Hynix facing broad investor de risking.*
If oil prices continue to rise or remain at elevated levels, Korean equities may keep lagging the broader EM complex. In that scenario, earnings, especially in energy intensive sectors such as automotive, would eventually come under pressure.

However, our base case assumes that the conflict extends for only a few more weeks before stabilizing, potentially via a ceasefire. Once tensions ease, we expect global energy markets to normalize and prices to move back toward pre conflict levels. Under this scenario, Korean equities should rebound, led by the technology sector. South Korea remains our highest conviction overweight within our EM equities strategies. We intend to use the recent weakness to selectively add to positions most affected by the turmoil, maintaining a decisive overweight in one of the most attractive markets in the emerging market universe.
Our constructive stance is driven by two key factors:
1. Valuations that remain compelling – now even more so – given the persistent Korea discount across PE, PB, and PCF metrics.
2. Strengthening earnings momentum across the market, especially among the technology leaders.
* The companies referenced on this page are for illustrative purposes only. No inference can be made on the future development of the companies. These are not buy, sell or hold recommendations.

WEDNESDAY, MARCH 4

15:00 CET
Asia Pacific Equities: Asia Pacific sell-off improves entry points
By Joshua Crabb, Head of Asia-Pacific Equities
Recent geopolitical developments in the Middle East have triggered a short‑term risk‑off episode following a strong market run. Historical experience suggests that, absent material escalation, such shocks tend to fade and equity performance reverts to being driven by fundamentals. The recent pullback is therefore viewed as a healthy correction rather than a change in the underlying investment case.
Valuations across Asia Pacific remain attractive, still trading at a meaningful discount to the US despite the rally year‑to‑date. The sell‑off has further improved entry points, and we have been selectively redeploying cash raised from recent profit‑taking into areas of market weakness.
Looking ahead, a combination of more attractive valuations, a still‑wide valuation gap versus the US, and supportive earnings revisions should continue to underpin capital flows into the region. While risks remain – notably geopolitical uncertainty, elevated order books in parts of the technology sector, and the gradual narrowing of valuation differentials – the balance of risks and rewards remains favorable.
Overall, Asia Pacific continues to offer a compelling medium‑term opportunity, supported by improving fundamentals, relative valuation appeal, and scope for incremental policy support in a more uncertain global backdrop.

WEDNESDAY, MARCH 4

08:00 CET
Emerging Market Debt: Underweight GCC region, reduced EM FX exposure
By Richard Briggs (Portfolio Manager) and Meena Santosh (Client Portfolio Manager )
As our multi-asset colleagues alluded to, heightened Middle East geopolitical tension typically influences three main transmission channels: oil, the US dollar, and global risk sentiment; and we are seeing this impact translate to EM sovereigns.

Energy importers can face deteriorating trade balances and renewed inflation pressure if oil prices rise, while commodity exporters may see fiscal buffers improve. Such volatility can trigger short term risk-off moves into safe haven assets such as US treasuries, the US dollar, and gold – leading to a stronger USD and wider spreads which in turn can tighten external financing conditions, particularly for countries with higher external debt or weaker reserve positions.

At the same time, global risk aversion can widen sovereign spreads indiscriminately in the short term, even where fundamentals remain intact. The key differentiation ultimately comes from external balances, reserve adequacy, commodity exposure and policy credibility, which determine whether volatility becomes a temporary mark-to-market shock or a more persistent funding challenges.

Portfolio positioning
Within hard currency strategies, we positioned ourselves underweight to the broader Gulf Cooperation Council region (GCC – political and economic alliance of six Middle Eastern countries: Saudi Arabia, Kuwait, Oman, Qatar, UAE and Bahrain).

In the local currency strategies we significantly reduced EM FX exposure given concerns around a potential conflict, and we further reduced this after the military operation began. We positioned ourselves underweight to higher beta FX exposures, including the South African rand, Mexican peso and Chilean peso on those geopolitical concerns and also positioned ourselves underweight to energy-dependent countries in the immediate aftermath including Hungarian forint and the euro.

Elsewhere, the most exposed currency within the region was the Egyptian pound. Earlier in the year we had been overweight given its attractive valuations and improving macro backdrop. Ahead of potential rising risk from the Iran-related geopolitical escalation, however, we closed our exposure as heightened regional conflict materially increases external pressures on Egypt’s already fragile external position. This creates both potential implications for FX but also confidence, as higher oil prices, capital outflows and renewed strain on foreign currency liquidity can quickly translate into downward pressure on the pound and heightened volatility in the short term.

TUESDAY, MARCH 3

17:00 CET
Market Flash: Investors are feeling the heat
By Colin Graham, Co-Head of Investment Solutions

Markets are selling off and this does not feel like a ‘buy the dip’ moment. Asian markets are hit hard after the Strait of Hormuz was effectively closed. European markets are also hit harder by rising energy prices than the US. Profit taking even hurts traditional safe-haven assets such as gold. The dollar, however, strengthens – as it should in times of crisis.

Transcript

This podcast is for professional investors only.

Erika van der Merwe (EM): Welcome back to Robeco’s special edition podcast on the military conflict in the Middle East. My name is Erica van der Merwe. The situation has escalated since US and Israeli forces struck Iran four days ago. As would be expected, markets are feeling the heat and increasingly so given that there are no clear signs of de-escalation. I'm joined again by Colin Graham, head of investment solutions at Robeco, to consider the investment implications. Welcome, Colin.

Colin Graham (CG): Hi, Erika.

EM: So, Colin, war is always a somber and a devastating matter. But from a purely markets perspective, the key concern, it seems at this point is still the implications for energy markets therefore prices and therefore inflation in the short medium and even the long run. Would you agree?

CG: Yes, Erika. What's changed from yesterday when we talked about this, is that the Straits of Hormuz is effectively closed. So both the rhetoric from Iran. But if you actually go to a shipping broker and say, can I sell my ship through the Strait of Hormuz, their insurance premiums are going to be very, very high.

EM: Right.

CG: So effectively, it's closed. And we know that 83% of the oil coming out of the Strait of Hormuz goes to Asia. So, China and the various other countries around there, India. Then you can see why Asia had a big sell off yesterday, because Japan is very dependent on energy imports. And you can see why that's moved to Europe, because they are also very dependent on energy prices going in there. And our strategist Pieter van der Velde has done a sort of study, and he thinks that European economy is about three times more sensitive to a rise in oil price than the US one. So there are other parts of the market which have performed very well, which are in the crosshairs.

EM: Okay. Before I ask you about but the components of those movements, if you just look overall at the market sentiment today compared to yesterday when we spoke. So yesterday there was more of a sentiment of buy the dip. And I think that was a reflection of markets assuming that this might be over soon. With today it's a far heavier selloff.

CG: Yeah. And again, it's not the standard asset classes you think of that are selling off in the risk off environment. And there's certain asset classes that are staying well bit. So, you know, what has career equities, Japan equities, gold, treasuries, bank stocks, and cyclicals all got in common?

EM: Not a lot. You tell me --

CG: Exactly.

CG: Yeah. So these are all areas of the market done very very well. So these are ones where investor positioning is very positive. So we're seeing this phase as more of, “Okay let's sell our profits -- take our profits -- on these various markets.” And that's why gold and equities are moving together today.

EM: Okay.

CG: So we think it's just profit taking on positions that investors have in portfolio. So nothing systemic yet.

EM: Okay. So link that then to because typically if we include in that very diversified list is some safe haven assets so there's normally a flight to safety playbook that plays out. It seems different.

CG: Yes apart from the dollar. But then if we look at the rhetoric around the dollar since the start of the year, it's everybody's short [of] dollar. So that's a very under -- if you think about it -- that's a very under owned safe haven asset. And therefore that's why you're seeing the dollar actually strengthen, as it should, being [a] safe haven.

EM: Okay. To what extent is the bond selloff around inflationary concerns.

CG: Yeah. Difficult to say. So we've just had our investment meeting. So we've discussed this and what the reaction function of central banks were and any spike in headline CPI inflation will be looked through by central banks because it's driven by the energy and will go up and it will come back down.

EM: Okay.

CG: So that. And what they'll say is, “Well actually higher energy prices are [a] drag on growth. Therefore we need to have lower rates.” Surely in order to make sure the economy is still running. So you could see this happen and therefore you'd expect much steeper yield curves from that perspective. So again, I'm not sure that the inflation aspect is fully priced in because if President Trump comes up tomorrow and says the war is over before his vote on Thursday in Congress, then you could see, well, this is a very short lived episode. Therefore, it doesn't have any inflationary impact.

EM: Okay. But if it were not, then we would nevertheless expect central banks to rethink things that were already dealing with sticky inflation before Saturday, right? So this does muddy the waters further?

CG: Yes. And I think it's the long term horizon versus the short term horizon. Short term they have to make sure that growth is still okay. And then they can worry about inflation later on. So central banks always worry about deflation and inflation. And if they don't have the tools to get out of a deflationary spiral, see BOJ for example. So they want to avoid that at all costs. So they'd rather err on the side and say well we know how to deal with inflation and we'll deal with that later. Very similar to what we saw at the start of this decade in the US, where Powell was saying, “Don't worry about it. We know we can deal with inflation. We're going to see it as transitory and then we'll deal with it if it comes.”

EM: Right. So far, you've touched on aspects of this, but which asset classes and which sectors have been the clear winners so far?

CG: Cash has been a clear winner. [CG laughs] But again, look, you know, we're still close to all-time highs in equities. It's not that it's like 2 or 3% fall. So it's not a big thing. What we're concerned that it continues further on. And we've done some analysis looking at prior events where you've seen a kinetic escalation of tensions. And generally you see it lasts two or three weeks to the bottom of the market, last two or three weeks to get back to where you were at the start. So that's telling you, you know, it could continue. So what we're doing is we're saying, “Look, we don't know. So let's cut half of our overweight in equities for risk management purposes. Let's see how this plays out. At the end of the week, it's going to be key whether the votes in Congress about the intervention in Iran is legal or not. If Donald Trump declares victory before that, then there's no vote, if you like. Secondly, if the Straits of Hormuz are still pretty closed by the Friday, then I think we'd be de-risking the portfolios further.” Because the escalation period and the duration of the disruption is getting longer, and therefore people will stop looking through this as a regional conflict and go, “Okay, this can affect the global economy. Let's figure out how it is.” Unfortunately, they'll say, “Let's figure out how it's going to affect the global economy and the assets we want to hold.” But they'll do it from a neutral position, not an overweight position. Hence why we've seen this de-risking of trades that have been very popular this year.

EM: And so just a final point on your portfolio and your tactical positioning right now if you were to de-risk your portfolio, define what that means?

CG: So we would take equities out. So we've been long emerging markets and we have been neutral on the US which means that we've been sort of slightly overweight Europe and Japan. So those – Japan, Europe, and emerging markets -- are where we'll take the risk down, so we'll cut the overweight in half. So that's taking a couple of percent out of emerging markets and a couple of percent out of Europe and Japan.

EM: And other asset classes?

CG: We discussed this, and I don't like any of the other ones. [CG laughs]

EM: Preferring cash right now? [EM laughs]

CG: Yeah, absolutely. So even, you know, long duration bonds, you're concerned about that, given the price action. Short duration bonds will probably work. So thinking about one to three year type time horizons, whether it's governments or indeed credit at this particular juncture, those types of assets should – will -- protect your money in the short term.

EM: From your perspective, just to emphasize this is not investment advice. You're talking around how you are thinking around your own portfolio right now. And then kind of in closing, what steps, announcements or diplomatic moves do you think would cause markets to calm down in addition to what you've already mentioned about US Congress?

CG: I think the de-escalation. We are not sure what the other large player in the world, the other so far in China. We're not sure what they're going to do and how they're going to react. We have a summit between Trump and Ji coming up soon. So again, we've seen this before where the US administration will escalate, escalate, escalate in order to get a good negotiating stance.

EM: Right.

CG: So if you think of that direction and we touched on this yesterday about the wider restriction on oil supply to China as well. So, that to me is sort of the endgame that we're sort of working on. So it means it could last two, three weeks.

EM: Colin. Great, thanks so much for coming in again, sharing your insights.

CG: Thanks, Erika.

EM: That was Robeco’s Colin Graham giving his expert insights on the market implications of the ongoing events in and around Iran. Thank you for joining this special update, available on all major podcast platforms and on the Robeco website. Stay tuned for our regular monthly episode. Until next time.

Thanks for joining this Robeco podcast. Please tune in next time as well. Important information. This is marketing material intended for professional investors. Capital at risk. The podcast was brought to you by Robeco Institutional Asset Management, a Dutch investment management firm located in Rotterdam, the Netherlands. Robeco Institutional Asset Management B.V. has a license as manager of UCITS and EFS for the Netherlands Authority for the Financial Markets in Amsterdam. In the US, this is brought to you by Robeco Institutional Asset Management, US, Inc., an investment advisor registered with the US Securities and Exchange Commission.

TUESDAY, MARCH 3

09:00 CET
Quant Equity: Portfolios maintain limited active exposure to Middle East and Energy
By Jan de Koning, Head of Quant Client Portfolio Management
Market developments
The Middle East conflict has triggered a significant geopolitical shock and widespread market volatility. With reciprocal actions continuing and no clear diplomatic resolution yet in place, markets are likely to remain sensitive to further developments in the near term.

The escalation introduces a meaningful geopolitical risk event for global markets. Heightened uncertainty typically leads to more cautious investor positioning, with a potential shift toward a short-term risk-off environment across equities and other risk assets.

Emerging markets may experience more pronounced reactions, particularly those in geographic proximity to the region, as investors reassess geopolitical exposure and capital flows. In parallel, energy markets and transport routes remain an important channel to monitor, given the strategic relevance of the Gulf region for global trade and energy supply.

If tensions were to persist or escalate further, markets could start pricing in secondary effects, such as additional sanctions, maritime disruptions, or changes in Western security and trade policies. These dynamics could influence cross-border trade, investor sentiment and short-term volatility across asset classes.

Portfolio positioning
Robeco’s proprietary portfolio construction algorithm focuses on bottom-up stock selection, while employing a risk framework that limits exposure to country and sector risks. Our Quant strategies maintain limited active exposure to Middle East names and the Energy sector, effectively muting the impact of market downturns.

Markets are currently reacting to headline risk and scenario-driven uncertainty as the conflict unfolds. Our investment teams are closely monitoring developments with full human oversight of all trading and positioning. We expect a limited performance impact as our systematic diversification is built to navigate these specific types of market shocks.

TUESDAY, MARCH 3

08:30 CET
Boston Partners: No immediate portfolio changes, watching for price dislocations
By Boston Partners

US markets largely shrugged off the developments in Iran, ending higher across most major indices, led by small caps. Oil prices (Brent) moved 7% higher on the day*, while gold also moved upward. The results indicate that markets had largely anticipated a potential military conflict as the US added military resources in the region over the prior weeks.

Other than energy and oil, specific segments that were impacted included defense companies (up) and airlines (down). This muted response could be pointing toward a market hopeful for or expecting a short-term conflict, with market fear and weakness settling in if the battle draws longer.

Looking at many of the historical market shocks, especially those with military conflict, US equity markets have remained resilient, with positive one-year returns following the Iraq war, Russia annexing Crimea, the bombing of Syria, the North Korean missile crisis and Hamas attacking Israel.

From a Boston Partners viewpoint, the approach to equity investing across our US and global equity strategies remains unchanged, as has been the case over our 31-year history of value investing. We will continue to assess individual opportunities presented by market volatility and, as always, look to construct portfolios that exhibit attractive valuation, strong business quality and improving business momentum.

We do not have any portfolio movements planned or scripted because of this event. Instead, we will look to take advantage of market movements that result in mispriced companies.
*Past performance is no guarantee of future results. The value of your investments may fluctuate.

TUESDAY, MARCH 3

08:00 CET
Investment Solutions: We expect escalation to be short lived but are prepared to adjust positioning
By Peter van der Welle (Macro Strategist) and Jonathan Arthur (Client Portfolio Manager)
We continue to monitor the situation closely, framing the outlook through the four-scenario matrix we formulated in February. These scenarios range from contained skirmishes to full-scale regional escalation, with market sensitivity rising sharply as probabilities shift toward a persisting disruption of the Strait of Hormuz, accounting for ~20% of global crude flows.
The US administration’s stated objective to pursue “regime change” in Iran, increases the risk of a full-scale regional escalation scenario. Military history shows that targeted bombing is often not sufficient to topple a regime and boots on the ground are needed. The question is however how likely in-person military deployment is, as it may cause many more US casualties. Boots on the ground would be a high-stakes strategy in light of the upcoming US midterm elections. It seems therefore likely that Trump will try to find an off ramp to claim a swift victory.
The oil price is the main channel through which this conflict can impact on the global real economy. Markets have been anticipating the potential of an oil price shock with energy related risk premia elevated at the end of February. For instance, the implied volatility of Brent was already above the level observed last June when Israel and US attacked Iran for 12 days. Yet, looking at past regional conflicts in the Middle East, oil prices traded 26% higher after three months on average.* The 13% oil price spike last weekend thus has priced around half of the historical near-term impact. Markets might be willing to continue to fade oil strength, given US political incentives to keep gasoline prices contained ahead of midterms and elevated ex ante risk premiums. However, with an effective closure of the Hormuz Strait now in effect, even a short duration closure could lift the conflict premium in oil prices meaningfully further.
Current portfolio (as at 27.02.26)
While the improving global macro backdrop and a solid earnings outlook have supported equity returns at the start of 2026, we have remained acutely aware of rising tail risks, notably the emergence of an ‘AI scare trade’ and heightened geopolitical tensions.
Against this backdrop, and given still‑supportive fundamentals, we have been most comfortable maintaining a modest equity overweight, evenly split between developed and emerging markets. Our current assessment is that the recent geopolitical escalation is likely to be short‑lived. As discussed, President Trump will want to avoid a prolonged military conflict, given the lack of voter appetite.
From a risk‑management perspective, the equity overweight is partially offset by allocations to gold and industrial metals. Within fixed income, both duration and credit risk are positioned neutrally versus the benchmark.
In periods of elevated uncertainty, we remain mindful of not overreacting to short‑term market noise. Recent history suggests that financial markets have often rebounded relatively quickly following military conflicts, a pattern that appears consistent with the relatively muted equity market reaction so far. Over the coming days, we will continue to monitor developments closely and adjust positioning as needed. Should the situation escalate, we would look to further enhance portfolio resilience, for example by increasing our gold exposure. Similarly, we may consider taking profits on the year‑to‑date equity overweight and reducing equity beta closer to benchmark levels.
*Past performance is no guarantee of future results. The value of your investments may fluctuate.

MONDAY, MARCH 2

16:00 CET
Asia Pacific Equities: We remain optimistic about Asia Pacific
By Joshua Crabb, Head of Asia-Pacific Equities
Ahead of the weekend, markets demonstrated considerable strength, even as tensions in the Middle East intensified. Consequently, we allowed cash holdings to rise above typical levels. With the current developments prompting a risk-off sentiment, our strategy –provided the conflict does not escalate significantly – is to selectively increase our positions in high-conviction assets and capitalize on pronounced, unjustified market movements. The combination of underinvested cash, strengthening Asian economies, and growing regional interest and allocations creates a supportive environment.

Regarding the Asia-Pacific Equities strategy, there is no direct exposure to the Middle East, though certain portfolio companies maintain operations there. Our holdings include defense, oil-related, and gold stocks, all of which have seen their share prices benefit from recent events.

We remain optimistic about Asia Pacific, supported by attractive valuations, robust growth prospects, ongoing governance reforms, and the continued emergence of under-recognized beneficiaries from the AI rollout.

MONDAY, MARCH 2

14:45 CET
Market Flash: What the Middle East conflict means for investors
By Colin Graham, Co-Head of Investment Solutions
As tensions in the Middle East intensified over the weekend, investors have been retreating toward traditional safe havens, such as oil, gold, the US dollar, and US Treasuries. The conflict’s ripple effects are also being felt unevenly across regions, from Europe and the US to China. Robeco’s Colin Graham takes a multi asset lens to the situation, exploring how markets are reacting and what those signals might mean for investors.

Transcript

This podcast is for professional investors only.

Erika van der Merwe (EM): US and Israeli strikes on Iran have triggered rapid escalation in the Middle East, adding fresh uncertainty to energy supplies and global risk sentiment. In this special podcast episode, we examine the latest developments and discuss what they could mean for investor portfolios. I'm joined by Colin Graham. He's Head of Investment Solutions at Robeco. Welcome.

Colin Graham (CG): Hi, Erika. How are you doing?

EM: Colin, if we could begin with you summarizing the main developments in Iran and the broader Middle East and how they differ from previous tensions in terms of scale and potential market implications.

CG: Well, I think the conflict has now moved from this shadow war to a broad, multi-day military operation war. So it has come out of the shadows and it's all front and center in terms of the headlines. And we've seen that there's been specific targets in Iran that have been hit. And, you know, this is the US and the Israeli administration trying to achieve their goals in terms of making sure that Iran does not reach nuclear power status -- nuclear weapons status.

EM: So is that really at the heart of what's going on here?

CG: I think so, because you can look at there's other regimes around the world where there is an action being taken and Iran is not a nuclear weapons power as yet. And we can see that this is something that both the Israelis and the American administration want to avoid.

EM: Now, looking directly at the investor implications of what's going on here, you have a multi-asset perspective. What are the primary channels through which these events could shape portfolios, and does it essentially pivot around energy prices, inflation expectations, and implications for risk sentiment?

CG: I think risk sentiment will be the initial move-in markets. So everybody puts a risk premium in because nobody knows. And anybody who says they know they're not telling the truth because we don't. And the main pinch point is around the Strait of Hormuz in terms of how much oil is going to get out and how much is going to be blockaded by the various factions around there trying to blockade there. Or it might be they don't. We don't know as yet.

EM: We've seen the immediate reaction in oil prices so often the barometer for tensions in the Middle East. What are the various scenarios that could play out and therefore with the implied different outcomes for oil markets and subsequent markets?

CG: I think it really depends how long the military intervention continues. And if it's a couple of days, then we expect the profile of the oil price to follow what we've seen in previous times, where we've seen missile strikes and air strikes in the Middle East. And so the oil price will start to come down again, because nothing has fundamentally changed in terms of the supply of oil around the world. Now we saw OPEC+ say that they're going to increase their quotas, but this is a small fraction of the oil that could be lost coming out of Iran. And also, if you think about the US and the US as the engine of growth, is, the US administration has been very clear in terms of trying to make sure that they have enough oil. So they are an oil exporter. They've also taken action in South America to control the supply lines from South America. So from their perspective, I am not sure they're worried too much about the spike in the oil price that were lost. And therefore, do we think this is going to derail the US economy as it stands today? No.

EM: And of course, there's a really strong political imperative in the Trump administration to keep things under control.

CG: Absolutely. So they do not want to commit boots on the ground because that was one of Donald Trump's election pledges. So we'll see how long the aerial bombardment lasts. We’ve seen the retaliation from Iran. And if from my perspective, if that is what they are going -- that's maximum force they retaliate with -- then this is not going to last very long.

EM: Right. And beyond that, also not wanting the inflationary implications for a domestic market for a voter in the US.

CG: Yes, we know the midterms are coming up. We can see this as a good distraction tactics by the administration to get away from domestic issues. And one of the indicators we watch is obviously the gasoline price because that affects every US consumer and is a very obvious sign of inflation.

EM: There have been as a result, safe haven flows into assets like gold, treasuries and the US dollar. Are there other defensive assets that we might be missing or that that could move as a result?

CG: Well, the one that we scratched our heads about is the Yen. You know, that should be a safe haven, has been in the past, but has really not acted like a safe haven over the last 4 or 5 years. So that would be one. The Swiss franc is obviously a safe haven that you can look at as well, but in a risk off environment then I'm not even sure gold will save you, because there are too many financial players. And we've written a couple of pieces on this, over the last 4 or 5 months. And the thing about gold now is that central banks used to be the biggest buyers of gold and holders of gold. Now it's financial interest is the biggest buyer and the biggest holder of gold as an asset. And so sentiment changes then it's not about the fundamental safety of gold. It's about what investors are trying to do in their portfolios.

EM: And then looking beyond these safe haven assets. If you look at equities and at credit, what movements are we seeing? Have we seen, especially in sectors or regions that have an exposure to events in the Middle East to supply chains, travel even? And, you know, given what you have now said, presumably you see only short term consequences?

CG: Yeah. And if you think of safe haven assets, then you're going to be starting to look at some of the magnificent seven again. Because what happens in the Middle East doesn't affect the software buying that you're going to make.

EM: Right.

CG: So from that perspective, it's also difficult to disaggregate where the risk premium is coming from, because we'd already seen credit spreads start to move out towards the end of February. So they're much higher at the end of February than they were at the beginning.

EM: Mhm.

CG: There is some stresses there, especially around the fundings for software names. So that had already happened. You know, we already saw the US Treasury below 4%, ten year Treasury below 4% on Friday anyway. So you were already seeing some safe haven flows, concerns about software AI creeping into the market. So it's difficult to say ,”oh, this is just Iran risk premium versus what's going on in terms of the software sector and the private debt sector in the US.”

EM: And then from a multi-asset perspective, yours, what tactical adjustments, if any, would you consider in response to these risks? And even if they were to escalate and also to phrase it very clearly, this would not be investment advice.

CG: So in our portfolios were long equities, underweight high yield, long commodities. And we're short dollar versus the euro and the Aussie dollar. So one thing that has surprised us is the Aussie dollar has held up pretty well. That's usually a risk-off asset. It gets hurt when risk sentiment turns negative. So if we look at our portfolios, do we want to close the underweight to dollars? Probably not, because our longer term view is that the dollar is on a weakening path. So we'd probably be looking to add to the short dollar in dollar strength commodities. I'm a bit more concerned about and I'd be looking to take profits, especially in the oil centered commodities part. So the gold and the industrial metals we have in portfolios is fine. But the broader sort of B.Com or GSI index ETFs – and those are the ones we'd sell because that sells a lot of our oil exposure. And in equities we have to assess whether the US economy is going to derail or not because of this regional conflict. So escalation would cause us more concern. But at the moment we go back to the fundamentals of the US economy and a lower ten year yield is probably a good thing. It gives room for rates to be cut and earnings have been fine. So what is there not to like about US equities? Apart from the valuations of course.

EM: [Laughs] Right.

CG: But we know as we've talked about in these podcasts that valuations are not driving markets right now.

EM: So to wrap it all up, looking ahead over the coming months, what key indicators or developments will you be watching closely? You know, being ready to adjust tactically or even structurally.

CG: So I think it's about the flow of oil on there. And then you'd have to worry about Europe. You know, we're reasonably constructive on Europe. And our one year outlook was non consensus on Europe's going to have a better year this year. You have to be worried about Japan because they're obviously an energy import. So two of the outstanding equity markets this year would be hit. And then you have to worry about China as well because obviously they're a big energy importer. And if you think about where they've also been getting their oil, Venezuela, that is now off the table. So if you think about China, they're probably in an even more sticky position, gooey position, than those other countries because their supply of oil is probably the most under threat.

EM: Great and helpful insights, Colin, thanks for joining us.

CG: Thank you Erika.

EM: That was Colin Graham from Robeco’s Investment Solutions team, offering clear insights on the market implications of the latest Middle East developments. Thanks for joining the special update available on all major podcast platforms and on the Robeco website. Stay tuned for our regular monthly episode. Until next time.

Thanks for joining this Robeco podcast. Please tune in next time as well. Important information. This is marketing material intended for professional investors. Capital at risk. The podcast was brought to you by Robeco Institutional Asset Management, a Dutch investment management firm located in Rotterdam, the Netherlands. Robeco Institutional Asset Management B.V. has a license as manager of UCITS and EFS for the Netherlands Authority for the Financial Markets in Amsterdam. In the US, this is brought to you by Robeco Institutional Asset Management, US, Inc., an investment advisor registered with the US Securities and Exchange Commission.

MONDAY, MARCH 2

11:30 CET
Fixed Income: EMD strategies reduced exposure to the Middle East
By Martin van Vliet, Fixed Income Strategist
Recent developments in the US-Iran conflict have triggered a flight to safety response across markets, with a muted impact on fixed income markets thus far. Oil and gas prices rose sharply, while US 10 year Treasury yields declined in the days leading into the crisis. The decline in Treasury yields reflects risk aversion, with investors rotating into intermediate maturity sovereign bonds.

Credit markets have repriced modestly but in an orderly manner, consistent with a broader risk off environment rather than systemic stress. The key macro risk lies in commodities, particularly with the effective disruption of shipping through the Strait of Hormuz – a critical artery for oil, LNG and fertilizers – which could have wider implications for inflation and policy if prolonged.

Against this backdrop, portfolios remain balanced, with credit risk close to neutral, and an overweight in duration in Europe. EMD strategies reduced exposure to the Middle East ahead of the conflict but retain selective overweights in rates markets like Brazil, Mexico, Peru or credits like Argentina, Ghana and Ecuador.

MONDAY, MARCH 2

11:15 CET
Global Equities: Focus on businesses with durable fundamentals
By Michiel Plakman, Lead Portfolio Manager and Co-Head Global Equity

The key question for the global economy remains whether the Strait of Hormuz could be effectively closed for oil and gas exports for more than a few weeks. A prolonged disruption would hurt global growth and raise inflation noticeably. For example, a sustained rise in the oil price by USD 15 per barrel could lift the level of US consumer prices by almost 0.5% and curtail gains in disposable incomes accordingly.

Oil prices have risen nearly 8% so far, but history suggests such spikes are typically brief. Past incidents in the Middle East (e.g. the 2019 Houthi attack on Saudi facilities) saw production restored quickly and prices fully reversed. Notably, the current move is more contained than the 15% overnight surge seen in the Houthi example. The market appears to be pricing in de-escalation, particularly in light of President Trump’s indication that any conflict would not last “longer than a few weeks,” which is helping keep risk sentiment contained.

We would expect President Trump to go to great lengths to prevent a lasting surge in energy prices that could hurt him domestically ahead of the US mid-term elections in November. US voters have already blamed him for high consumer prices prior to the strikes against Iran. He may use US military might to prevent a prolonged closure of the Strait of Hormuz, negotiate with Iran, and/or ask other oil exporters to raise supplies to offset any drop in Iranian exports.

Over the next few days, we will monitor whether operating routes normalize. The outlook for Iran itself remains highly uncertain, with a wide range of potential political outcomes: the old regime under new leaders, regime change, prolonged unrest, or even civil war? Longer term, Iranian oil exports might even rise under a new regime and/or a deal with the US.

Portfolio implications
We are likely to increase our weight in the energy sector further. At this stage, we do not see any other immediate impact on our portfolio positioning.

We continue to focus on identifying high-quality companies that trade at a meaningful discount to their intrinsic value – businesses with durable fundamentals that are well-positioned to withstand a challenging macroeconomic environment in the medium term.

MONDAY, MARCH 2

11:00 CET
EM Fundamental Equities: All strategies underweight Middle East region
By Jan de Bruijn, Client Portfolio Manager
The US and Israel’s coordinated large scale strikes on Iran since 28 February have drawn significant response from Iran, closing airspace in the Middle East and impacting commercial shipping in the Arabian gulf. Both nations’ governments framed the operation as a pre emptive move to blunt emerging threats, while US officials signaled a desire to encourage internal political change within Iran. With reciprocal strikes continuing, the near term outlook remains volatile, and diplomatic efforts have yet to establish any meaningful stabilization pathway.

This escalation introduces a significant geopolitical shock with implications across asset classes. Elevated uncertainty has generated immediate risk off in equity markets with the MSCI Emerging Markets Index down 1.8%, MSCI Asia Pacific Index down 1.8%, Stoxx Europe 600 down 1.8% and in the US S&P 500 futures down 1.5%.* Commodities were broadly higher with Brent crude oil up 9.6% at USD 76.9 per barrel and Gold up 2.5% at USD 5,410 per ounce.

A prolonged conflict will increase the risk of new sanctions, maritime restrictions, and rapid shifts in Western security postures, all of which could affect capital flows and cross border trade dynamics. Clients should expect short term volatility and be prepared for scenario driven swings in global risk sentiment.

Energy equities are positioned at the center of this shock. Crude prices are likely to remain elevated due to heightened supply disruption risk, especially given Iran’s strategic position near the Strait of Hormuz, one of the world’s most critical oil transit corridors, which is de facto closed at the time of writing as marine insurers have withdrawn coverage. Crude oil exports from Saudi Arabia’s Ras Tanura sea island remain normal but the question is whether the cargoes will be able to exit the gulf.

Fund positioning:
The Gulf Cooperation Council (GCC – political and economic alliance of six Middle Eastern countries: Saudi Arabia, Kuwait, Oman, Qatar, UAE & Bahrain) accounts for 5.6% weight in the MSCI EM Index (as at 31 January 2026). All Robeco Emerging Markets strategies are underweight the region with the only overweight being in UAE.
Both flagship funds are somewhat underweight the oil and gas sector but given the uncertainties surrounding events, we will closely monitor the situation as it unfolds.

*Past performance is no guarantee of future results. The value of your investments may fluctuate.
Source: Bloomberg 0943 CET, 2 March 2026