June 2, 2021

Evolving Geopolitical Risks: Investors Aren’t Scared

The BlackRock Investment Institute has relaunched its “Geopolitical Risk Dashboard” (there‚Äôs also an interactive version) – adding 4 new risks to the “top 10”:

– COVID-19 resurgence: The fight against COVID-19 falters in the developed world.

– Climate policy gridlock: Developed economies fail to take policy actions consistent with their goals to reach net-zero emissions.

– Emerging markets political crisis: Failure to arrest the COVID-19 pandemic severely stresses EM political systems and institutions.

– Global technology decoupling:Technology decoupling between the U.S. and China significantly accelerates in scale and scope.

The unique thing about BlackRock’s dashboard is that it includes indicators that show whether the risks are on investor radar screens, and it analyzes how much markets have already priced in each risk. BlackRock finds that investors have been feeling pretty good since the change in the US administration, and attention to geopolitical risks is below the average of the past four years. Unfortunately that means that if some of these risks materialize, they could catch the markets off-guard.

Liz Dunshee