We laid out three scenarios: rapid return to $60-70 on Brent (not happening), current $90-100 scenario, and $120-130 which cuts global demand. For Asia equities, the two more adverse scenarios are bad because Asia is a major oil importer.

In this scenario, Strait of Hormuz shut means ~20M bpd interruption. Saudi pipeline reduces to ~16M, other supply adds ~1M, IEA reserves maybe 1-2M bpd. At most one third of shortfall is made up. Not a huge surprise where oil is trading.

Scenario analysis is helpful; losses not particularly significant. Less surprise than tariff views last April/May. Markets reasonably calm on equities side.

We systematically raised energy/upstream exposure, materials, telecoms. Removed almost all consumer discretionary because high energy prices feed through to food, households won't engage in discretionary spending.

Gold very well owned going in. US dollar relatively firm. US self-sufficient in oil/gas, so from terms of trade, USD should be well supported in this adverse scenario.

Sometimes need significant adjustments to get policy response. In optimistic scenario if oil falls to $60-70, we'd be outright buyers of Japan, Korea, Taiwan. Not the scenario we're in.

We expected cyclical pickup in India, but at $100 Brent vs base case $60-70. India has high sensitivity vs GDP, low inventories (~30 days oil vs Japan 240 days).

For foreign investors, it's about relative earnings growth more than absolute economic growth. India hasn't looked as good vs Korea, Taiwan, Brazil. Market could recover quickly if oil falls and strait reopens.

EM is cyclical, had good year last year with weak dollar. Structural vulnerabilities, Asia-centric, so vulnerability to commodity shock. Not chasing EM rally, skeptical of secular bull market.

In more adverse $120-130 Brent scenario, dollar would likely strengthen. We have 15-20% downside quite quickly.

Be aware of scenarios, do risk analysis. Robust approach for uncertain world, diversified portfolio.