Doing international business in uncertain times (part one)

U.S. military intervention in Syria will affect markets worldwide

 

In the last couple of posts, we have focused on the DOs and DON’Ts of international business, discussing ways to make it more profitable and easier on you. However, no matter how prepared a company may be, there are always external factors to consider.

International business, of course, depends on the relationships between nations, between people. If those relationships are threatened in any way, conversations are stopped and business suffers. It doesn’t even have to be a “legitimate” threat; all it takes is newswire chatter of a presumed threat and the promise of retaliation. At the end of the day, uncertainty is no economic aphrodisiac.

True risk takers thrive in an uncertain atmosphere, but for the vast majority of companies, uncertainty is not good for business. The situation in Syria is a good example. In the article, “Syria doubts drive up oil, yen; stocks slip,” Reuters reports, “Uncertainty about the possibility of military action against the Syrian government lifted oil towards a five-month high on Tuesday and undercut share prices and spurred demand for safe-haven assets like the yen.”

Although at this point military action seems like a foregone conclusion, just the mere thought of possible military action has shaken up the markets. The shakeups haven’t been massive, as some investors and companies are waiting to see how the Syrian situation plays out. Nevertheless, even a little shakeup has changed the landscape. For instance, the Turkish lira has sunk to a new low, as have the Indian rupee and Malaysian ringgit. This creates a domino effect that companies cannot afford.

Say U.S. military intervention in Syria is a bluff concocted by administrative officials, would a bluff still affect the economy? Yes, yes it would (and yes, it is), because uncertainty is no economic aphrodisiac. Even before the Syrian situation, Americans were facing rising interest rates and taxes. Americans can now expect higher oil and gasoline prices on top of everything else.

What’s going on in Syria is tragic and heartbreaking. There has been too much bloodshed, with around 100,000 confirmed deaths. The fighting in Damascus and Aleppo has been intense. In times like these, it seems cold to focus on the economic and financial implications of such tragedy, but when involved in the business world, you have to think about these things. Whatever will happen in Syria concerning American military intervention will affect markets worldwide. Just plan accordingly.

Source: http://www.iol.co.za/business/international/syria-doubts-drive-up-oil-yen-stocks-slip-1.1568921#.Uh4FBddc_cw

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