Sovereign investors look to emerging markets as geopolitical tensions rise, says study

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Geopolitical tensions have surpassed inflation as the primary concern for sovereign investors, prompting them to invest more in emerging markets and gold, Invesco survey finds

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Tension between the US and China is top of the list of concerns, which may benefit emerging markets such as India and Brazil, as manufacturers could opt for these markets to diversify their supply chains and production bases, according to the survey. Photo: AP

Mark Gong

Published: 6:00pm, 22 Jul 2024

Geopolitical tensions have surpassed inflation as the primary concern for sovereign investors, prompting them to invest more in emerging markets and gold, according to a new survey.

Eight out of 10 sovereign wealth managers or central banks view geopolitical tensions as a major risk to global growth in the next year, up from 72 per cent in 2023, according to the survey by Invesco released on Monday.

The annual study by the US financial firm collected the views of 140 chief investment officers and other key executives of sovereign wealth funds (SWFs) and central banks who managed a total of US$22 trillion as of March.

“Longer-term risks [geopolitical tension] have become more salient as inflation has fallen back towards central bank targets,” said Martin Franc, Invesco CEO of Asia ex-Japan in a statement.

“Meanwhile, elections across major markets over the past year have proven difficult to predict.”

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