- The Iran war has left investors looking for ways to hedge the spike in volatility.
- Jitania Kandhari of Morgan Stanley Investment Management thinks energy security is a big opportunity.
- She says her team is focused on renewable energy and critical metals as top ideas.
The US-Iran war continues to upend financial markets nearly two weeks after it began, and investors are seeking out safety trades amid the soaring volatility.
Jitania Kandhari, deputy CIO of the solutions and multi-asset group at Morgan Stanley Investment Management, said that there's a key opportunity emerging that investors should consider. Kandhari told Business Insider that energy security is the trade to watch during the conflict and beyond.
"I think every country will want to have a very secure energy supply, energy resources, less dependence globally, just like we saw in this whole resource security that underpins a lot of the global power dynamics," she said in an interview on Thursday.
The view has recently informed her team's investment strategy. Kandhari added that they have been focused on geopolitical hedges, such as defense and energy stocks primed to gain amid the conflict.
Yet, she also said that recently, the team has incrementally increased exposure to energy security and production. They see a shifting geopolitical landscape in which major economies are likely to rethink their energy needs and how they are secured.
"The one thing that we really think will emerge out of this is the whole energy supply chain," she said. "And what that means for renewables — governments putting in favorable policies, be it subsidies or tax benefits for energy self-sufficiency, in whatever way possible
Kandhari sees the most opportunity within this new boom in the energy security supply chain. She highlighted several critical metals as likely beneficiaries.
"From a structural basis, we have also been invested in some of these commodities, copper or Uranium, which is needed for nuclear facilities," she noted.
If countries increase their investments in energy security, Kandhari thinks they may double down on safety infrastructure. She added that this may create opportunities for companies in the defense and cybersecurity spaces, citing the likely need for guardrails as countries prioritize energy independence.
Finally, she sees renewable energy investments as one of the most effective ways for investors to capitalize on a new phase of the energy narrative, even as markets focus heavily on oil flows due to the conflict.
"Renewables is one way to play it," she said. "I think some countries may also invest, or enable and promote investments, in refining capacity. I think there are opportunities that we have to look at it country by country to see where all of this looks interesting."
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