While inflation is certainly coming under control in the United States, geopolitical shifts elsewhere will continue to be a strong determinant of U.S. equities performance. Geopolitical tensions between the United States and China as well as renewed conflict in the Middle East, including the Israel-Hamas War, could either benefit or seriously dent investors’ portfolios if they’re not vigilant. Below are three global stocks benefitting from current geopolitical trends.
Frontline (FRO)
Frontline (NYSE:FRO) is a large oil tanker company boasting a fleet of 75 vessels that transport crude oil and refined products across the globe. The company benefits from the high demand for oil transportation, as well as the low operating costs of its modern and fuel-efficient ships. Frontline’s stock has also performed very well in 2023. As a result of OPEC having largely cut production, oil tankers have found themselves increasingly traveling across to the Atlantic Ocean to ship crude from Brazil, the United States and Guyana to countries in Asia. These longer distances have pushed up “ton-miles,” or the amount of crude shipped and the distance, and as a result, revenue.
More recently, the geopolitical tumult in the Middle East has led many leading shipping companies, including Maersk (OTCMKTS:AMKBY), to abandon their routes through the Suez Canal due to recent attacks by Yemen-based Houthi rebels. Now, not only is the Panama Canal faced with a blockage, but so is the Suez Canal, which could place upward pressure on shipping rates in the long run. Tanker companies like Frontline could stand to benefit.
Sea Limited (SE)
Sea Limited (NYSE:SE) is a leading internet platform company in Southeast Asia and Taiwan. It has three core businesses: Shopee, an e-commerce platform; Garena, a gaming and digital entertainment business; and SeaMoney, a digital financial services platform. While the internet giant’s gaming business has come out with titles like Free Fire, equities investors have been paying more attention to Sea Limited’s e-commerce business, Shopee. In August, the internet company announced plans to increase investments in Shopee amid growing competition from platforms like ByteDance’s TikTok.
Sure, investors were not happy about SE abandoning profitability. But, I believe investments in Shopee could very well pay off, as the e-commerce segment is one of SE’s fastest growing. Moreover, the overreaction to the announcement of Sea Limited’s long-term strategy resulted in the stock trading at an attractive 1.5x forward sales multiple.
There’s a lot of opportunity to gain from Southeast Asia, Sea Limited’s core operating market. Thus, investors would probably benefit from patience on this one.
Mastercard (MA)
The payment processing behemoth warrants little introduction. Mastercard (NYSE:MA) makes the final entry on this list due to the company’s ability to increase its global reach despite ongoing geopolitical conflict. In mid-November, after years of ongoing geopolitical tensions, the presidents of both the United States and China met in San Francisco in hopes of easing the current antipathy between the two nations.
Mastercard came out of these talks as one of the biggest winners. Later that same month, Chinese regulators announced the approval of the payment processor’s card clearing joint venture in which Mastercard will be a majority owner. The approval will allow the company to conduct yuan-clearing operations and issue yuan-denominated bank cards. While the company will certainly be entering a market dominated by established domestic players, such as WeChat Pay and Alipay, the shift in regulations will bring a sigh of relief to expats and tourists.
All in all, access to the world’s second-largest economy will benefit Mastercard and its shareholders.
On the date of publication, Tyrik Torres did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
