The attached note takes a look at the importance of geopolitical risk for investment markets and key geopolitical risks to watch over the remainder of 2021.
The key points are as follows:
Geopolitical issues generate much interest, but don't necessarily have a significant impact on markets.
But geopolitical risks are higher than prior to the GFC reflecting three big themes: a populist backlash against economic rationalist policies; the falling relative power of the US; and the polarising impact of social media.
After a lull following the transition to President Biden, key geopolitical issues to watch this year are: US and Australian tensions with China; Iran/Israel tensions; Russia and Ukraine; the German election; US tax hikes; and a possible early Australian election.
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