Analysts Say Markets Ignoring Geopolitics is Not New

Geopolitical tensions are heating up globally, but it isn’t clear whether investors need to react, with stock markets not paying the conflicts much attention so far.

“You can be forgiven for thinking that the world is a pretty terrible place right now,” Michael Cembalest, global head of investment strategy at JPMorgan Asset Management said in a recent note, citing everything from Russia-Ukraine tensions, the Gaza conflict, civil wars in Syria, Afghanistan, Iraq and Somalia, insurgencies in Nigeria and Mali, and even the long-running North Korea rumblings.

“Strange as it might seem, such conflicts are not affecting the world’s largest equity markets very much,” he noted, adding that’s “nothing new.”

Currently, war zone countries have a small global footprint, representing just 0.7 percent of global equity market capitalization, 0.4 percent of portfolio investment flows and 0.8 percent of corporate profits, offset only by their 9.0 percent share of global oil production, Cembalest noted.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza