Global shares have been going through a bit of a correction. Apart from worries about global growth, a range of ‘event risks’ have been playing a role: the Ebola scare, Iraq’s deteriorating security situation and a terrorist threat posed by Islamic States (IS), Hong Kong’s extended pro-democracy protests and Ukraine’s stalemate with Russia. Here is a brief overview of the current geopolitical issues in the spotlight.


The Ukraine crisis may be heading towards a resolution of sorts, with the Ukrainian parliament granting a degree of autonomy to the eastern regions currently in conflict. There may still be more to go before the conflict is resolved but – with Russia describing the move as positive and the conflict failing to escalate – it appears that Ukraine is starting to recede as an issue for investment markets.

Middle East

The conflict with IS in Iraq and Syria is still hotting up. So far, global oil supplies are not under threat; oil prices are running lower than when the conflict first hit the headlines. Increasing prospects for the deployment of ground forces in Iraq by the US and its allies and the threat of IS-related terrorist activity (as recently seen in Canada) have the potential to upset investor confidence. In terms of the latter, the experience with Al Qaida-related attacks last decade is of relevance to investors with the main lesson being that the impact of such attacks on financial markets tends to be short-lived.


The risk around Ebola has clearly risen with cases in the US and Europe. Our base case remains that it should be easier to control its spread in the US and in other western countries, given modern medical facilities and higher hygiene standards. As such, it will remain largely contained to Africa but with short-term bouts of share market volatility around Ebola scares. If Nigeria can quickly get it under control (it has now been declared Ebola-free) then Western countries should be able to contain the issue. However, as we saw in Hong Kong and Singapore with Severe Acute Respiratory Syndrome (SARS), the main economic threat is a hit to consumer confidence and spending. US consumer confidence appears to have been marginally, but it is worth keeping an eye on this.

Hong Kong protests

The protests in Hong Kong recently are certainly a risk to China. In saying this, there is a good chance that the protesting will peter out as the people of Hong Kong grow frustrated at the disruption these demonstrations pose to their ability to go about their business. This looks to be happening already.

The Catalonian independence referendum

Common sense prevailed in Scotland and the ‘No’ vote won the referendum on independence. This was good news for UK including Scottish assets, and more broadly for the Eurozone as other pro-independence movements like the Catalonians in Spain weren’t given the encouragement a Scottish ‘Yes’ vote might have provided.

Most geopolitical uncertainties flare-up with much media fanfare only to then fade with little impact globally. That said, the abovementioned geopolitical issues are worth keeping an eye on as they could remain a source of volatility in the period ahead.

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