Global Political Drivers

Political and social developments are for the most part inseparable from economic drivers of risk and opportunity in the global economy and financial markets. But there are times when purely political factors play a decisive role. Global Political Drivers is a new component of our macro research service that will identify and analyse such factors. As the title suggests, the selection criterion will be the scale of the potential impact – that is, large enough to make the theme relevant for global asset allocators. The detailed insights on the subject matter of many themes should also offer value to portfolio managers and analysts focused on particular geographies and asset classes.

What are these drivers?

Geopolitical: Tensions and threatened/actual conflict between great powers. A current example would be the civil war in Syria that has turned into a proxy war with great power involvement; and the Middle East in general is liable to generate several risks over and above Syria. This type of driver will typically involve low (tail) risk but high
impact. We will cover such geopolitical topics as and when we see changes in the degree of risk. For instance, Trump’s phone call with the Taiwanese president escalates the risk of great power confrontation in East Asia. By contrast, the flashpoints between Russia and NATO in western Eurasia are easing.

Domestic politics: Perhaps the single most powerful driver as we initiate this coverage are voter revolts in Europe – as they threaten a systemic global financial shock from the potential dislocation of the euro area. A broader related theme is anti-migrant identity politics fuelling and focusing economic grievance in advanced industrial countries. The incoming Trump administration provides a central instance of this theme and its potential to lead to economic policies and outcomes requiring a reassessment of portfolio risk profiles.

* China stability risk: Xi’s new model, Jonathan Fenby, Constantine Fraser, 7 Dec 2017
US - China
* Europe and America fear factor review, Christopher Granville, Constantine Fraser, 24 Nov 2017
* Global ‘Trump risk’ one year on, Christopher Granville, Marcus Chenevix, Constantine Fraser, 9 Nov 2017
Trump Risk
* Kurdistan, oil prices and US hegemon risk, Christopher Granville, Marcus Chenevix, 27 Oct 2017
Middle East
* The lessons of Ms Koike’s fizzle, Christopher Granville, 12 Oct 2017