By Francis Muyshondt.
Geopolitics is as decisive for financial markets today as interest rates and earnings. Investors can no longer afford to ignore this aspect, indicates Anna Rosenberg, head of geopolitics at asset manager Amundi Investment Institute, in an interview.
Trends and opportunities
European and US stock markets are breaking record after record, despite wars, protectionism and political uncertainty. For Anna Rosenberg, who is responsible for geopolitical strategy at Amundi , this is not a paradox but a reflection of the new reality. 'It is a misconception that geopolitics only amounts to bad news for the markets,' she underlines. 'Yes, geopolitics brings risks, but at the same time it creates huge capital flows. The rivalry between the US and China, for example, is not only a source of tension but also an engine of innovation and investment. Both countries are pumping billions into artificial intelligence, semiconductors and quantum technology. That fuels a whole value chain, from software to energy infrastructure, which investors are benefiting from today.'
The Amundi analyst even sees a certain predictability in those developments. 'When geopolitical tensions rise, you know that certain sectors such as defence, energy security and data infrastructure will benefit structurally. This makes geopolitics not only a source of uncertainty, but also of structural investment opportunities. The trick is to discern which conflicts are temporary, and which culminate in long-term strategic realignments.' Yet she cautions against simplistic reasoning. 'Not every conflict leads to gains for defence stocks, and not every sanction is bad for markets. Geopolitics requires nuance. It is not black and white, it is grey with many shades. That is why it is important to analyse it and not be afraid of it.'
She says the markets are not reacting despite geopolitics, but rather thanks to those shifts. 'AI, defence and gold illustrate it perfectly. One sector is growing because superpowers want to outdo each other, the other because investors want to protect themselves. In this sense, the stock market today is a mirror of geopolitical reality.'
A world resembling an emerging market
Rosenberg started her career as an analyst of sub-Saharan Africa, then the region where political risks were highest. 'But since 2016, everything has changed. With Brexit and the first Trump administration, investors suddenly had to learn to assess political decisions. This was followed by covid, the war in Ukraine and tensions around Taiwan. The world today functions as one big emerging country: unpredictable, capricious and politically driven.' According to her, investors realise this better than ever. 'They are very aware of the risks, but at the same time do not want to be left on the sidelines. They protect themselves through gold or diversification, but continue to invest so as not to miss the stock market rally. 'FOMO (Fear Of Missing Out) is still stronger than the fear of geopolitical shocks.'
Donald Trump's return as US president has caused nervousness among investors, but Rosenberg puts it in perspective. 'Trump is an additional disruptive factor, but not the cause of the tensions. The underlying trend of economic friction had existed for much longer. Consider the growth of protectionism, export controls and sanctions. Even under Biden, we saw this with the Inflation Reduction Act. Trump is only accelerating that evolution.' According to her, all this will lead to an increasingly rapid erosion of US dominance. Indeed, Trump is undermining the global order that the US itself has built and is pushing the world further towards multipolarity. Everything is developing faster than before so the accelerated pace of change is now the biggest uncertainty.
What place for Europe?
In that power-shifting landscape, Europe is trying to find its place. 'The world order today revolves around three forms of power,' Rosenberg explains. 'Access to resources, military clout and diplomatic relations. Europe actually only has the latter. It is a medium-sized power, like India or the Gulf states. That means the EU has soft power, the capacity to influence and connect, but little hard power.'
At the same time, she sees opportunities for the continent. 'Europe shows remarkable unity despite internal political tensions. It continues to support Ukraine and stand firm in the face of Russian pressure. Increased defence spending in Germany and other countries is creating economic momentum, including in the supply sectors. And in periods of crisis, we see that Europe sometimes comes to historic decisions. Consider the release of the German debt brake or joint debt issuance during covid. 'Difficult times force political breakthroughs,' stresses the head of geopolitical analysis at Amundi Asset Management.
Practical view
Rosenberg's team at Amundi supports a lot of the group's portfolio managers. Their work combines political insight with data-driven analysis. 'We work with three pillars. First, there is the quick analysis of current events, from an escalation in the Middle East to new tariffs between the US and China. To do so, we provide scenarios with probabilities: for example, a 60% chance that a particular intervention will go ahead. This allows fund managers to weigh up their positions.' The second pillar is the study of long-term trends. 'We see that everyone in this world is diversifying,' she clarifies. 'Central banks, investors, companies and governments spread their risks, geographically and strategically. This brings about structural shifts in trade flows and capital markets.' Ultimately, it is pragmatism that typifies her work. 'My job is not to tell fund managers what to do, but to show them the political reality. We provide the analysis; they translate that into portfolios. Sometimes that means more exposure to defence stocks, sometimes better hedges. It is an ongoing conversation between politics and markets.'
Amundi also works with a range of analytical tools. 'We have classified the past decades according to so-called geopolitical regimes and examined their impact on inflation, growth and markets. On that basis, we know that today we are in a regime with elevated inflation risks. We also use our Geopolitical Sentiment Tracker, a data model that measures the tone of international relations in real time through media flows and policy data. That allows us to monitor tensions and bilateral relations, for example between the US and China.' The recent results are striking, she points out. 'US relations with allies have deteriorated in recent months, while China's diplomatic position has improved. Such insights help us support both short-term and long-term decisions.'
A more dangerous but not desperate world
Rosenberg usually looks ahead 12 months. 'You can make predictions with reasonable certainty on a six- to 12-month horizon. For the longer term, as indicated earlier, we work with trends, not exact forecasts.' Still, she sees clear lines for the coming years. 'Geopolitical risks continue to rise. We continue to move towards a multipolar world, with more economic disruption and technological protectionism. At the same time, competition around AI is the new space race while tensions around Ukraine, Taiwan and the Middle East remain high. 2026 will be more dangerous, but I don't expect a full-scale war. No one has any interest in that today.' She compares the situation to debt accumulation. 'High debt makes a system more vulnerable, but does not automatically lead to a crisis. So it is with geopolitical risk: it increases the sensitivity of the global economy, but it does not have to derail it.'
Rosenberg offers the following as a final note. 'When I was brought in by Amundi a few years ago, geopolitical analysis was still a separate discipline. And during our annual investment seminars, there was one extra session on geopolitics,' she says. 'Today that is integrated into all discussions, from equities to bonds. It has become part of the macroeconomic context.' This reflects a broader shift in attitudes in the financial sector. 'For decades, the sector was dominated by quantitative thinkers. Everything revolved around numbers, interest rates and central banks. Politics was considered noise. But recent years have shown that political decisions can move markets as hard as an interest rate hike.'
