Demand for geopolitical analysis soars as investors’ risks multiply
The need for such advice was highlighted this week when the US threatened various countries with tariffs if an agreement was not reached to take control of Greenland, prompting a swift reaction in markets.
Other geopolitical events shaking markets include Russia’s invasion of Ukraine in 2022, US President Donald Trump’s call for broad tariffs in 2025 followed by negotiations with individual countries, and this month’s US intervention in Venezuela.
For investors, geopolitical risk was overshadowed by factors like economic data points and central bank decisions. But Mehill Marku, chief geopolitical analyst at PGIM Fixed Income, said demand for insight has grown steadily since the Ukraine war.
“Before 2022, geopolitics was not an important function in terms of portfolio investment; it was nice to have but not a ‘must have,'” Marku said, adding that the number of client calls had increased. “What is really challenging for many people is that all crises are interconnected.”
Investors and consulting firms say the growing need for geopolitical consulting and analysis is driving them to either expand their own in-house capabilities, seek more independent analysis or increase the advice they give to clients. This analysis may include written reports, more specific recommendations, or developing scenario analyses.
“We almost have to develop a new force,” Rishi Kapoor, vice chairman and chief investment officer of Investcorp, the Middle East’s largest alternative investment firm, told the Reuters Global Markets Forum on the sidelines of the World Economic Forum in Davos.
Pandu Patria Sjahrir, CIO of Indonesia’s sovereign wealth fund Danantara, said his “fund is now doing a lot of work on the risks of political leaders.”
“This year, perhaps even more than other years, we are focusing much more on geopolitical risks,” he said. “We’re thinking about the worst case for insurance right now. In fact, my base case is the worst case.”
Marc Gilbert, president of the BCG Geopolitics Center, said the second Trump administration’s policies helped push geopolitics, which was “in the top 20” about a decade ago, to the top of the list of client priorities.
He said things are “faster, harder, more volatile” regarding U.S. trade and foreign policy statements. He has held 235 meetings on these issues with senior executives and company board members in the last 18 months, which he said represents a dramatic increase.
Asked to comment on the growing demand for geopolitical analysis, White House spokesman Kush Desai said the president’s “shaking up of this broken status quo has finally put America first” and that “the trillions in investment flowing into the United States are proof that investors believe the United States is the most dynamic global economy.”
CONSULTANCY COMPANIES SAVED THE OPPORTUNITY
Banks allocate resources to this issue. JPMorgan launched a dedicated Geopolitics Center last year, while Lazard Asset Management and Goldman Sachs launched geopolitical advisory divisions in 2022 and 2023, respectively.
JPMorgan did not respond to requests for comment about the center. Goldman and Lazard did not respond to requests for comment.
Matt Gertken, chief geopolitical analyst at investment consultancy BCA, said increased awareness of global risk has increased the need for expert geopolitical analysis firms and said his company was growing, but without providing details.
Consulting firm Signum Global Advisors has also seen an increase in demand and increased its partner roster by 25% last year as its client list grew, said Charles Myers, the firm’s president and founder.
There is particular interest from investors trying to understand what the changing power dynamics in Venezuela might entail, Myers said, adding that he has 20 slots for an investor trip to the country on March 23, but only 60 clients willing to attend, and is considering turning the trip into a full-fledged investor conference at a hotel in Caracas.
Jens Larsen, London-based head of Eurasia Group’s geoeconomics team, said competition to provide geopolitical insight was increasing.
“I’m still not sure if the supply of advice is keeping up with the demand as the nature of the challenges becomes more multi-faceted,” Larsen said.
