2 hours ago
Egan-Jones has published an analysis examining how evolving military technologies and geopolitical tensions involving Iran could have significant implications for global markets and institutional portfolios.
The report notes that war remains one of the most expensive undertakings for governments and economies, citing an estimated $8.3 trillion total cost for conflicts in Iraq, Syria, and Afghanistan. However, the analysis emphasizes that technological shifts in warfare may present an even greater risk to investors and policymakers.
Drawing historical parallels, the commentary explains that major battleships once dominated global military power but were ultimately rendered vulnerable by advances in airpower during World War II. Despite their size and cost, vessels such as the Bismarck and Tirpitz proved unable to withstand coordinated aerial attacks, illustrating how new technologies can quickly alter strategic assumptions.
According to the analysis, a similar shift may now be occurring with the rapid advancement of missile and drone technology. The report points to developments in the Ukraine war, where Ukraine, despite lacking a navy, was able to sink multiple Russian vessels and limit Russia's access to much of the Black Sea using missiles and drones.
The commentary raises concerns about the vulnerability of large military assets such as aircraft carriers to large-scale drone and missile attacks. It notes that even if defensive systems neutralize many incoming threats, the impact of a small number of successful strikes could potentially cripple a carrier.
The report also highlights geopolitical implications involving Iran, which has demonstrated advanced drone and missile capabilities and supplied Shahed drones to Russia. The analysis suggests that potential military confrontations in the region could present risks not fully reflected in market expectations.
Beyond the Middle East, the commentary notes broader implications for global markets, including potential risks to Taiwan and semiconductor supply chains. Firms such as TSMC play a critical role in global technology production, meaning geopolitical disruptions could have widespread economic consequences.
The report concludes that technological change in warfare may significantly reshape geopolitical risk and that investors should carefully assess how evolving military capabilities may affect global stability and investment environments.
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Egan-Jones, an NRSRO founded in 1995, offers timely and accurate credit ratings and proxy services.
