When the World Catches a Cold, Ethiopia Must Learn to Stay Warm

Mar 21 , 2026
By Yohannes T. Arega

---

Global Markets have logged a third straight week of losses after US and Israeli strikes on Iran in late February, causing a five percent slide in the S&P 500, an eight percent fall in Japan’s Nikkei this month, and a six percent drop in Europe’s broad market index. Oil has nearly doubled in price within weeks, reviving concerns about stagflation and pressing central banks from Washington to Frankfurt. However, these should not be viewed as a collapse but as a correction driven by geopolitical shocks and energy disruptions.

---

The thunder from the Strait of Hormuz has reached every trading floor on earth. Since the United States (US) and Israel launched strikes on Iran in late February, global equity markets have entered a period of pain that is now well into its third consecutive week of losses.

Oil has nearly doubled in price within weeks, and the ghost of 1970s-style stagflation, that toxic combination of rising prices and slowing growth, is haunting the corridors of every central bank from Washington to Frankfurt. The S&P 500 has fallen five percent from its recent high. Japan’s Nikkei has bled eight percent this month. Europe’s broad market index is down six percent.

In Addis Abeba, where a nascent investment culture is slowly taking root, many wonder what it could mean for them. A great deal, and not all of it may be bad.

What we are witnessing unfold is not the collapse of the global economic order. It is a violent and geopolitically charged correction, but a correction, nonetheless.

A correction is a decline of 10pc and 20pc from a recent peak. Bear markets exceed 20pc. Both are normal parts of market cycles and have historically been followed by recovery. The current global pullback, while geopolitically charged, has not yet entered bear-market territory for US equities.

The immediate cause of this turmoil, the closure of the Strait of Hormuz, through which roughly one-fifth of the world’s oil and gas supplies transit, is a shock with real consequences. For oil-importing countries, especially across Asia and Europe, the pain is acute. Ethiopia, too, will feel the pressure of higher fuel costs feeding through to transport, logistics, and ultimately to the price of goods in Merkato. This is not a trivial concern.

Financial historians will recall that the S&P 500 has experienced an average intra-year decline of roughly 14pc every single year since 1990, even in years when it ultimately closed higher. Markets do not go up in straight lines. They breathe. They panic. They recover. The investor who understands this rhythm does not fear the downswing. They prepare for it.

But the investor’s mind should hold dual thoughts - the pain of today, and the opportunity it creates - all at the same time. History is littered with moments when fear dominated headlines, such as during the 2008 financial crisis and the COVID-19 crash of March 2020, and patient capital was richly rewarded. Every time, the market eventually recovered, and those who bought at the depths of despair reaped the greatest rewards.

Says Warren Buffett, whose successor at Berkshire Hathaway has reaffirmed this philosophy for 2026: “Be fearful when others are greedy, and greedy when others are fearful.”

This brings us to perhaps the most powerful tool available to the ordinary investor, dollar-cost averaging (DCA), a strategy so simple it is frequently dismissed, yet so effective that the world’s most sophisticated fund managers employ it.

It is the practice of investing a fixed amount of money at regular intervals (say, every month or every quarter) regardless of what the market is doing. When prices are high, a fixed contribution buys fewer units. When prices fall, as they have now, that same contribution buys more. Over time, this mechanical discipline eliminates the ruinous temptation of trying to time the market, a game that even professional traders routinely lose.

Imagine a young professional in Bole who commits 3,000 Br monthly to an internationally accessible index fund (ETF). In January, when markets were near highs, this buy was at peak prices. In March, with markets down five percent to 10pc, the same 3,000 Br purchases noticeably more shares. By the time markets recover, and they will recover, the average cost per unit is lower than the peak, and the overall return is higher than if invested in a single lump sum at the wrong moment. This is the quiet power of consistency over cleverness.

If one invests 100 dollars every month at a monthly share price of 10 dollars in Month One and five dollars in Month Two (after a correction), this buys 10 shares, then 20 shares, for an average price of 6.67 dollars per share. When the price recovers to 10 dollars, the investement is already in profit, even though the market is only back to where it started.

What other opportunities does a market like this present?

For the more seasoned or risk-tolerant investor, downturns offer entry points into quality assets at discounted prices. The technology sector, broadly speaking, is trading well below its 2025 highs. Energy stocks, ironically, are among the few risers, as oil producers benefit directly from the price spike. Defensive sectors such as consumer staples and healthcare tend to hold their value better during periods of geopolitical turbulence. And gold, that ancient hedge against chaos, has surged past 5,100 dollars an ounce, rewarding those who held a portion of their wealth in the metal.

For Ethiopians, the landscape presents its own distinct considerations. The Ethiopian Securities Exchange (ESX), launched in 2024, remains in its early stages. It has yet to have the depth to mirror the wild swings of Wall Street or the Tokyo Stock Exchange. But our integration with global markets is growing. Ethiopian banks are raising capital. Domestic companies are beginning to list. And those in the diaspora, particularly in the United States, Europe, and the Gulf, hold stakes in global financial markets that are directly affected by these developments.

The lesson for all of us, whether we are investing in foreign countries, buying shares in a domestic company, or simply deciding whether to hold our savings in Birr or gold, is the same. Do not let panic be your portfolio manager.

The investors who will look back on March 2026 with satisfaction are not those who sold in fear. They are those who held their positions. Those who continued their monthly contributions. Those who, with discipline and perhaps even a touch of audacity, used this moment of global anxiety to accumulate assets at prices that will look remarkably cheap in five years.

Ethiopia is a country that knows something about resilience. We have weathered droughts, political transitions, and economic storms that would have broken lesser countries. Our people carry within them the memory of hardship converted into endurance. That same temperament - patient and far-sightedness unshaken by short-term noise - is precisely what the world’s greatest investors have always described as their most valuable asset.

Let the markets tremble. Let the oil prices spike. Let the headlines scream. The investors who keep their heads when all others are losing theirs will, in the fullness of time, be proven right. Stay the course. Keep investing and dollar-cost average through the storm. The sun will rise again over the Strait of Hormuz and over the Ethiopian Stock Exchange.

---

PUBLISHED ON Mar 21,2026 [ VOL 26 , NO 1351]

---

[ssba-buttons]