[E-Daily Marketin Soyoung Park Reporter] The global investment banking (IB) industry is turning its attention to the Middle East, home to the world’s largest sovereign wealth funds. “Oil Drive” is a series covering news from the Middle Eastern investment market. It covers stories of global investment firms diving into “oil money” as well as news from the Middle East itself, where countries are seeking to move away from oil dependence and focus on investments in new technologies. It also reports on South Korean companies attracting investment from Middle Eastern capital. [Editor’s Note]

Military tensions between the United States and Iran are escalating once again. President Donald Trump declared an end to the ceasefire with Iran but recently announced plans to resume a naval blockade against the country. He also threatened to strike Iranian power plants and bridges if an agreement to end the conflict is not reached by next week.

As geopolitical tensions rise, global investors’ perspectives on the Middle East and North Africa (MENA) markets are shifting. Rather than betting on high volatility or uncertainty, investors are focusing on defensive sectors where demand remains steady even amid war. The strategy is to invest in stable sectors to reduce portfolio volatility and wait to see how the situation unfolds.

According to the global investment banking (IB) industry on the 15th, investment sentiment toward the Middle East and North Africa (MENA) region is shifting as the war with Iran drags on.

While the MENA region has emerged as an emerging market and attracted the attention of global capital markets, the recent atmosphere has been subdued as geopolitical risks remain unresolved. Capital market professionals are maintaining their interest in local markets while seeking investment diversification strategies to spread risk.

An industry insider noted, “Rather than betting on market volatility, investors are taking a wait-and-see approach while securing liquidity,” adding, “When considering investments, they tend to diversify or focus on defensive sectors that hold up relatively well even during periods of geopolitical stress.”

In other words, rather than focusing on the “energy” sector—which reacts immediately to geopolitical risks—they are seeking out other stable areas.

In the current market environment, the key sectors the industry is keeping an eye on include △medical and healthcare, △consumer staples, △utilities, and △telecommunications. In a recent report, global asset management firm Kendrium noted that the concentration on tech stocks in global equity markets is easing, and interest is broadening toward defensive sectors. It further analyzed that, among defensive sectors, consumer staples and healthcare are performing relatively well.

Conversely, there are predictions that interest in the tourism industry—which Middle Eastern countries have long relied on as a key driver of economic diversification—will wane as travel demand is expected to deteriorate. This means that sectors such as aviation, tourism, hospitality, and transportation could face significant pressure if travel demand declines or supply chain disruptions occur. In fact, travel platform companies such as Airbnb and Expedia have already reported booking cancellations and a slowdown in demand in some regions due to the fallout from the war in the Middle East.

A source familiar with local conditions stated, “The fundamentals of the MENA region can still be viewed as positive, driven by robust growth and improved profitability,” adding, “While the share of global investment remains low, Middle Eastern countries are implementing investor-friendly policies to attract more foreign direct investment (FDI), and given their solid fundamentals, we can expect additional capital inflows.”