HQ TrustOctober 18 2021

Who benefits from high oil prices

2 mins read

Written by Sven Lehman, Fund Manager

In theory, everything is once again quite simple. A high oil price tends to help the energy sector and weighs on more cyclical sectors such as chemicals, car manufacturing or the travel industry. Or are the changes in oil there just a transitory item, since the companies are hedged against the fluctuations of the commodity? Sven Lehmann has done the maths.

In his current analysis, the fund manager of HQ Trust compares the relative performance of 20 sectors when oil prices rise and fall. For this purpose, Sven Lehmann divided the price development of the “black gold” into five quintiles based on the annual change in USD, ranging from strongly rising to strongly falling.

His study covers the years from 1984 to the present.

  • “Historically, most sectors outperformed when oil prices fell than when they rose.”
  • “Utilities are the only sector that relatively outperformed when oil prices were rising sharply than when they were falling sharply over the next 12 months. However, the difference is also very small in the energy sector, at 0.2 percentage points.”
  • “TMT sectors have historically been particularly responsive to a significant change in oil prices.”
  • “When oil prices fell, stocks in the technology, media and telecommunications sectors performed among the best in relative terms. Conversely, when the commodity rose, they lagged the market relatively significantly.”
  • “When oil prices were high, the least cyclically sensitive stocks in the health care, food and personal care sectors outperformed the market the most.”

Please note:

Investing in the capital markets involves risk and, in extreme cases, can result in the loss of all capital invested. Past performance is not an indicator of future performance. Forecasts are also not a reliable indicator of future performance. The presentation does not constitute investment, legal and/or tax advice. All content on our website is for information purposes only.