What is Geopolitics?
Geopolitics includes wars and conflicts, tensions between major powers (US-China, US-Russia, India-China, Israel-Iran), alliances (NATO, BRICS, QUAD), trade blocs (EU, USMCA, RCEP), sanctions regimes, energy diplomacy, and territorial disputes. While historically a side note for markets, geopolitics has become increasingly central to investment analysis as globalization fractures.
Why it matters for investors
Geopolitics drives commodity prices (oil, wheat, fertilizers), defense spending, technology decoupling (semiconductors, AI), supply chain reshoring/friend-shoring, currency moves (safe havens like USD, CHF, JPY benefit), and tail-risk pricing in markets. Major events (Russian invasion of Ukraine, Israel-Hamas war, US-China tariff escalations) can reset asset class correlations and risk premiums.