Higher Geopolitical Volatility Not As Harmful As Headlines Suggest

Despite record-high geopolitical conflict and military spending, equity markets remain supported by structural growth from AI. Bonds face competition from alternative assets and pressure from rising government debt and inflation.

Key Takeaways

• 1.Geopolitical uncertainty and conflict activity are at historically high levels, with 61 active state-based conflicts recorded in 2024.
• 2.Equities remain attractive relative to bonds due to structural growth drivers like Artificial Intelligence (AI), while bonds face headwinds from high debt and inflation.
• 3.For financial markets, the economic transmission (supply chains, energy, trade conflicts) is more critical than the sheer number of geopolitical conflicts.

Table of Contents

• Higher geopolitical volatility not as harmful as headlines suggest
• Appendix
• Global asset class preferences definitions
• Risk Information
• Generic investment research – Risk information

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