US To Control Venezuelan Oil 'Indefinitely'; Iran Protests | Horizons Middle East & Africa 1/8/2026

Horizons Middle East & Africa - January 31, 2024 - Summary

Key Concepts:

• Asian Market Correction: Following a strong start to the year, Asian stock markets experienced a second day of declines driven by mixed U.S. economic data, geopolitical shifts, and Trump’s social media activity.
• U.S. Economic Policy Shifts: President Trump announced potential bans on institutional investment in single-family homes and restrictions on defense company dividends/buybacks, impacting those sectors.
• Venezuela Oil Control: The U.S. plans to exert control over future Venezuelan oil sales, stipulating revenue be used for U.S.-made goods.
• Iran Protests & Geopolitical Risk: Ongoing protests in Iran, coupled with regional tensions and Trump’s rhetoric, are raising concerns about stability.
• Chip Sector Rotation: A shift in investor focus from mega-cap tech companies to chipmakers, fueled by AI demand, is occurring in Asia.
• Global Bond Market Activity: A surge in global bond sales indicates strong investor appetite for risk.
• Saudi Market Opening: Saudi Arabia opened its $2.5 trillion stock market to all foreign investors, resulting in a market jump.
• SAMSUNG Profit Surge: Samsung reported a tripling of profits driven by strong demand for memory chips, indirectly boosted by AI server demand.

1. Market Overview & Asian Performance

Asian stock markets experienced a second consecutive day of declines after a strong start to the year. The declines were attributed to a combination of factors: mixed U.S. economic data, rapid geopolitical shifts, and increased activity on Donald Trump’s social media accounts. Specifically, tech names in China and beyond struggled, while chip stocks saw increased demand. The handover from Asia Pacific was “quite negative.” Winnie Hsu (Hong Kong) reported losses in Hong Kong and Japan (over 1% decline), while South Korea’s KOSPI reversed earlier losses, boosted by better-than-expected Samsung earnings. The tension between China and Japan, specifically China’s anti-dumping probe into Japanese chipmaking materials, is impacting sector performance, benefiting Chinese chipmakers.

2. U.S. Market Impact & Policy Announcements

The S&P 500 also saw a slight decline following a dip the previous day. Two sectors were particularly affected by President Trump’s announcements:

• Housing: Trump’s stated intention to ban institutional investors from buying single-family homes caused homebuilder stocks to drop, with Blackstone falling around 5%. The aim is to address housing affordability.
• Defense: Trump’s announcement restricting dividends and stock buybacks for defense companies unless they increase investment in production and research surprised the market, leading to selling pressure in the defense sector.

3. Venezuela Oil & U.S. Strategy

The U.S. Energy Ministry announced plans to take “full control” of Venezuelan oil in the future, following an agreement to receive approximately 50 million barrels of oil. This move aims to control Venezuela’s most valuable resource, with the stipulation that revenue be used to purchase U.S.-made goods. Oil prices were up 0.5% in response. Oil companies are reportedly seeking guarantees from the U.S. government before investing in Venezuela.

4. Global Bond Market & Chip Sector Rotation

Global bond sales have had their busiest start to the year, with nearly $260 billion borrowed, indicating strong investor appetite for risk. A notable trend is a rotation in Asian markets, with increased interest in chip and memory chip companies (driven by AI demand) at the expense of larger tech giants like Alibaba and Tencent, which are facing increased government scrutiny. Jenson Huang (CES) predicted increased demand for memory chips this year.

5. Iran Unrest & Geopolitical Concerns

Iran is experiencing significant protests driven by economic hardship. President Rouhani has ordered security forces not to target peaceful protesters, but the situation remains volatile. Aniseh Bassiri Tabrizi (Control Risks) highlighted that these protests are more widespread than previous unrest and are driven by a broader economic base. She noted that Iran is more vulnerable now due to geopolitical factors (weakening of proxies, economic struggles) and the potential for U.S. intervention, especially given Trump’s rhetoric. She believes another escalation between Israel and Iran is “very likely” due to unresolved underlying conditions.

6. Saudi Arabia Market Opening & Samsung Earnings

Saudi Arabia opened its $2.5 trillion stock market to all foreign investors, resulting in a 1.6% jump in the index. This move is intended to revitalize capital markets and attract more investment. Samsung reported a tripling of its fourth-quarter profit to a record high, driven by surging demand for memory chips, indirectly fueled by the AI boom. While Samsung is benefiting from the overall demand, it is currently behind SK Hynix and Micron in high-bandwidth memory (HBM) technology and needs to catch up.

7. Other Notable News

• Russia’s Recruitment in South Africa: Russia is reportedly targeting South African gamers through Discord to recruit fighters for the war in Ukraine.
• UN Report on DRC: A UN report alleges Rwanda is backing M23 rebels in the Democratic Republic of Congo, creating an autonomous region.
• Zambia’s IMF Facility: Zambia decided not to extend its IMF credit facility.
• Ghana Inflation: Ghana’s annual inflation rate slowed, potentially leading to further rate cuts by the central bank.
• Warner Bros. Discovery & Paramount: Warner Bros. Discovery rejected Paramount’s takeover offer.
• Anthropic Funding: AI startup Anthropic is raising a new round of funding at a $35 billion valuation.
• Apple Credit Card: JP Morgan will take over the Apple credit card from Goldman Sachs.

Synthesis/Conclusion:

The global economic landscape is marked by shifting investor sentiment, geopolitical risks, and technological advancements. While markets began the year strongly, concerns are emerging regarding U.S. policy changes, escalating tensions in the Middle East, and the potential for economic slowdown. The AI boom is driving demand in the chip sector, creating opportunities for companies like Samsung, but also raising questions about long-term sustainability. The opening of the Saudi stock market represents a significant step towards attracting foreign investment, but its success will depend on broader economic conditions. Overall, the outlook remains uncertain, requiring careful monitoring of geopolitical developments and economic indicators.