Political Risk and the Global Economy

Political Risk and the Global Economy

Investors are keeping close tabs on various scenarios that could potentially lead to a “June crisis” amid key global market-moving and political events.

Increased volatility caused by rate hikes in the United States and eurozone risks, among other things, and the subsequent market adjustment are all likely, but it seems far-fetched to translate this as something that could lead to a financial meltdown, they pointed out.

Later this month, the U.S. Federal Reserve is widely expected to raise interest rates, with policymakers there signaling at least two more hikes this year, citing strengthened economic outlook.

HEFFX, however, guarded against any scaremongering plots, saying chances are slim that the Global stock markets will actually undergo any drastic changes factoring in overall economic circumstances.

Another source of concern that has weighed down the market came from Italy, as a new round of elections there could be a factor this year, which would possibly lead to the country’s departure from the European Union.

Pointing to a slowdown in the rise in global oil prices and Fed members’ pursuit of a stable monetary policy, the U.S. central bank would not jack up the target rates faster than market expectations, and investors are not likely to make unusual moves.

As the culmination of recent peace gestures surrounding North Korea, U.S. President Donald Trump and North Korean leader Kim Jong-un are scheduled to meet in Singapore next Tuesday for an unprecedented showdown on the communist country’s nuclear weapons programs.

Any headway in the talks could lead to considerable easing of tensions on the Korean Peninsula that have often contributed to the so-called Korean discount, a nagging source of concern for the local bourse and the economy as a whole.

Reflecting growing optimism for the outcome of the talks, there have been moves by investors to buy stocks that can benefit from improved ties in recent trading sessions.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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