CFA Lecture

Red October


Red October – Rising Political Risk in Four Different Geographies in Q4 2013

In contrast to 2012, markets have been barely troubled by political risk this year, with the focus very much on the fundamentals and, latterly, the Federal Reserve together with monetary tightening in China. However, the autumn (or ‘fall’, as the Americans would have it) may see politics-related risk rising in several geographies, notably the eurozone but also East Asia, the Middle East and the US. Although we see a systemic event as a tail risk, we still think that politics has the potential to move markets non-negligibly in the coming weeks, with October currently looking particularly risky.