Guest Blog Post by Wei Woo
Wei Woo from Research Capital has been doing presentations here at our centre for over 12 years, and has working in the financial planning and investment management industry for 17 years. Each month, he provides us with guest blog posts to educate us on a variety of financial topics. Make sure to watch our WSAC calendar to see when Wei will be in the centre doing his Toonie Talk presentations…we promise you won’t be disappointed.
READ HIS BLOG BELOW
Impact of Rising Military Conflicts on Retirement Portfolio – Wei Woo
2025 Summer Update
The global environment in 2024 and 2025 has seen a continued uptrend in military tensions as defense spending hit record highs. According to the Stockholm International Peace Research Institute, global military expenditure reached an all-time high of $2.7 trillion in 2024, marking a 9.4% increase over the previous year and the highest annual surge since the end of the Cold War. More than 100 countries raised their defense budgets, especially in Europe and the Middle East, in response to ongoing conflicts and heightened geopolitical risks.
Recent Military Conflicts and Market Impacts:
- Ukraine War (2022–2025): The ongoing conflict between Russia and Ukraine continued to weigh on global financial markets. The war triggered sustained volatility, with commodity markets—especially energy and grains—seeing significant price increases due to disrupted supply chains. For example, as of December 2023, global food and grain prices were still 12–13% above their December 2020 levels. The war also led to increased risk aversion, declines in many emerging market equities, and a sustained flight to safe-haven assets such as government bonds and gold.
- Hamas–Israel Conflict & Regional Escalation (2023–2025): The Hamas–Israel war, which erupted in October 2023, initially caused market volatility and a run-up in oil prices due to concerns about disruption in the Middle East. The situation further escalated in mid-2025 when Israel struck Iranian facilities and the U.S. carried out retaliatory actions, raising broader geopolitical risks. These events created uncertainty in financial markets and led to increased volatility, higher energy prices, disruptions in global trade and supply chains, and heightened inflationary pressures.
- Broader Trends: Recent studies have shown that during major geopolitical risk events, global stock prices tend to drop, with emerging markets seeing average declines of about 2.5–5%, and a notable increase in sovereign risk premiums. Despite these shocks, history shows that markets often recover in the following year—since World War II, 73% of conflicts saw positive stock returns one year after an act of aggression.
Implications for Retirement Portfolios:
Rising global tensions are especially concerning for retirees, whose portfolios often demand stability and reliable cash flow. Geopolitical events can result in:
- Increased volatility and potential downward pressure on riskier assets
- Disruption of industries/sectors with high international exposure (e.g., energy, defense, transportation, agriculture)
- A flight to “safe haven” assets, such as domestic government bonds and gold, which might provide lower overall returns but greater short-term protection
Retirees should also be aware that some investment categories—like defense stocks and certain commodities—can actually benefit from increased military spending and global tension, as seen in the short-term gains of U.S. defense industry equities following escalation in the Middle East. However, the broader economic impacts, such as higher inflation and lower consumption due to increased government military spending, may weigh on growth-oriented investments over time.
Portfolio Strategies in Today’s Environment:
- Diversification remains key: Exposure across asset classes, sectors, and geographies helps mitigate the impact of any single geopolitical event.
- Defensive assets: Increasing allocation to resilient assets like gold, high-quality structured notes, and alternative long / short strategies can offer a cushion against volatility.
- Regular review: Portfolios should be periodically assessed to ensure risks are aligned with retirement goals and changes in the global landscape.
- Professional advice: Consulting a financial professional is critical, especially in times of heightened uncertainty.
Conclusion
Rising military tensions have a complex and often unpredictable effect on financial markets. While short-term volatility is likely, the historical resilience of global markets, combined with disciplined diversification and prudent risk management, remains the best approach for retirees seeking to preserve and grow their retirement savings in today’s uncertain world.
Make Sure you check out Wei Woo Toonie Talk on Friday, September 19, 2025
If you would like more information please contact Wei Woo:
Wei Woo
Investment Advisor, CIM, EPC
Research Capital Corporation
Private Client Division
Office : 780 – 460 – 6628
Cell : 780 – 299 – 0760
