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By Opalesque: According to Amundi Investment Institute's "Investing in a 'Low Trust' World" report published last month, geopolitics has moved from being a peripheral, episodic risk to a central variable shaping macroeconomic policy, market behaviour, and portfolio construction.
The defining feature of this new era is the erosion of trust between nations, says the European asset manager. Countries are prioritizing resilience over efficiency, seeking to reduce dependencies on others while increasing their own leverage. This isn't a temporary shock but a structural "rupture" that requires investors to embed geopolitical analysis throughout the investment process rather than treating it as a side consideration.
Why 2025-2026 markets look "contradictory" but aren't
Gold, select equities, and emerging markets all performed strongly in 2025, which seems to defy a simple "risk on/risk off" framework. Their explanation: these are all facets of the same underlying story, a search for alternative opportunities and safe stores of value amid multipolar competition and rising defence/AI spending. More recently, following escalation in the Middle East, gold actually weakened as markets priced in inflation risk, while equities rallied on AI optimism and oil rose on supply concerns.
The lesson here is that geopolitics doesn't dictate a fixed playbook, it changes which risk factor (growth vs. inflation) dominates, and that determin...................... To view our full article Click here
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