By Suzanne McGee and Divya Chowdhury
RHODE ISLAND/DAVOS, Jan 23 (Reuters) - Demand for geopolitical analysis is rising, as asset managers and corporate investors seek guidance on the best way to price in risk from wars, territorial saber-rattling and global political risk.
The need for such advice was highlighted this week when the U.S. threatened various countries with tariffs unless a deal was reached over the U.S. taking control over Greenland, causing a rollercoaster reaction in markets.
Other geopolitical events that have roiled markets include Russia’s 2022 invasion of Ukraine, U.S. President Donald Trump’s 2025 call for broad tariffs and subsequent negotiations with individual countries, and this month’s U.S. intervention in Venezuela.
For investors, geopolitical r…
By Suzanne McGee and Divya Chowdhury
RHODE ISLAND/DAVOS, Jan 23 (Reuters) - Demand for geopolitical analysis is rising, as asset managers and corporate investors seek guidance on the best way to price in risk from wars, territorial saber-rattling and global political risk.
The need for such advice was highlighted this week when the U.S. threatened various countries with tariffs unless a deal was reached over the U.S. taking control over Greenland, causing a rollercoaster reaction in markets.
Other geopolitical events that have roiled markets include Russia’s 2022 invasion of Ukraine, U.S. President Donald Trump’s 2025 call for broad tariffs and subsequent negotiations with individual countries, and this month’s U.S. intervention in Venezuela.
For investors, geopolitical risk used to be overshadowed by factors including economic data points and central bank decisions. But since the Ukraine war, the demand for insight has been climbing steadily, said Mehill Marku, lead geopolitical analyst for PGIM Fixed Income.
"Before 2022, geopolitics wasn’t necessarily an important function in portfolio investment terms; it was a good thing to have but not a ‘must have’," Marku said, adding the number of client calls had spiked. "It’s the interconnectedness of all the crises that feels really challenging to many."
Investors and consultancy firms say the rising need for geopolitical advice and analysis has prompted them to either ramp up their own in-house capabilities, seek more independent analysis or increase the advice to give clients. Such analysis can include written reports, more tailored advice or developing scenario analyses.
"We have to develop a new muscle, almost," Rishi Kapoor, vice chairman and chief investment officer of Investcorp, the Middle East’s biggest alternative investment firm, told the Reuters Global Markets Forum on the sidelines of the World Economic Forum in Davos.
"Earlier on, the geopolitical backdrop was something that we kind of took for granted and just assumed that it was a stable backdrop."
Pandu Patria Sjahrir, CIO of Indonesia’s sovereign wealth fund Danantara, said his fund now did a lot of work on political leaders’ risk.
"This year, maybe even more so than any other year, we’re focusing a lot more on geopolitical risks," he said. "We think about worst case now in terms of underwriting. In fact, my base case is worst case."
The second Trump administration’s policies have helped catapult geopolitics to the top spot on the list of client priorities, from being "somewhere in the top 20" about a decade ago, said Marc Gilbert, head of the BCG Center for Geopolitics.