London Soaring oil prices have displaced Greece's sovereign debt as a threat to global economic growth and financial markets, HSBC Holdings, Europe's largest bank by market value, said.
"With Greece disappearing, at least temporarily, from the headlines, investors have quickly found a new source of anxiety thanks to the recent surge in oil prices," HSBC Chief Economist Stephen King said in a note yesterday. "If the trend persists, a fragile economic recovery in the developed world could quickly be derailed and inflation could return to emerging markets."
Brent crude surged to as much as $128.40 a barrel on Thursday, the highest since July 2008. Brent for April settlement slipped 1.2 per cent to $124.67 on the London-based ICE Futures Europe exchange at 12.48pm yesterday.
Equity investors should "take insurance" by becoming overweight in energy stocks while foreign exchange investors should favour the currencies of oil-producing nations such as Norway, Malaysia, Brazil and Russia, he said.