1 ETF That May Rise If the Strait of Hormuz Remains Unblocked

Stock Market Rises Following Strategic Announcements

Stocks wrapped up the week positively, with all three major indexes climbing over 1%. This uptick came right after Iran declared the Strait of Hormuz was “fully open.” This news followed a 10-day ceasefire arrangement between Israel and Lebanon.

Both the S&P 500 and Nasdaq Composite reached new all-time highs. For the S&P 500, this marks the 13th gain in the last 14 trading days, while the Nasdaq is currently enjoying its 14th consecutive upswing.

The ceasefire is a temporary resolution, and it remains uncertain whether this calm will be sustained, especially since the U.S. continues to enforce a blockade on Iranian ships in and out of the strait.

Nevertheless, the announcement regarding the reopening significantly impacted oil prices, causing a nearly 10% drop in Brent crude, which now sits at $82.21. If the situation continues to improve, oil prices might keep falling. For those interested, there are investment opportunities that could arise from this circumstance.

It’s no surprise that the combination of dropping oil prices and the reopening of the Strait of Hormuz has positively influenced the stock market. Falling oil prices tend to affect various industries beyond just energy and transport—they also impact retail, agriculture, and many others reliant on the movement of goods and transport.

The broader economic implications are noteworthy, particularly in Asian nations like China, Japan, and South Korea, all of which depend heavily on oil and gas transport through the Strait of Hormuz. South Korea, for example, sources about 60% to 70% of its crude oil from this route; during the recent conflict, South Korean stocks saw a significant decline.

The iShares MSCI Korea ETF, which suffered a more than 20% drop during the conflict, has since enjoyed a sharp recovery, hitting record levels last Friday. This particular ETF outperformed last year, nearly doubling its value due to the boom in memory chips, specifically with major producers like Samsung and SK Hynix.

Before the conflict, the ETF had already risen over 50%, and with robust demand for memory chips anticipated to last until at least 2027, there’s potential for even more gains if stability returns to the region. Additionally, as more shareholder-friendly policies emerge, Korean stocks could benefit further, and the ETF’s price-to-earnings ratio remains significantly lower than that of the S&P 500.