Politics and geopolitics are polarizing and confusing. Yet it is critical that investors integrate such criteria into their analysis.
“[Investors] absolutely should be paying attention to geopolitics,” said Willis Sparks, the director of global macro at Eurasia Group, in an interview with Jason Voss, CFA. “It’s a complicated issue and you really have to look at it issue by issue, market by market. But absolutely politics is increasingly important for both developed and emerging-market countries.”
In less mature markets, politics tends to have a bigger influence on outcomes, he said. But developed nations aren’t immune to political turmoil that can spill into markets. For example, Sparks referenced President Barack Obama’s decision to bail out the auto industry during the recession.
Sparks went on to stress how vital it is to prepare for potential geopolitical events while remaining objective.