Growing geopolitical instability

Asset management CEOs understand perfectly well the importance of staying on top of the business details when it comes to steering their organisations on a path to profitability. But in today's turbulent multi-polar world, global macro and geopolitical threats demand special attention in their daily agenda.

As one executive of a leading global investment group remarked at IMpower FundForum 2025: "Geopolitics is a critical business function. You could fill the Caspian Sea with everything CEOs should be thinking about."

This year alone has been unprecedented, with Israel taking the fight to Hamas and Hezbollah, and most recently, Iran, with the US entering the fray to target Iran's strategic nuclear sites.

In Europe, Ukraine and Russia remain entrenched in a third year of conflict. Tensions between India and Pakistan recently boiled over and are unlikely to be resolved anytime soon. While in Asia Pacific, China is committed to extending its sphere of influence under the guise of the Nine-Dash Line, a maritime boundary that encircles about 90% of the South China Sea as Sino-US tensions simmer on multiple fronts; most notably economic tariffs, which has seen President Trump impose and then backtrack on punitive trade tariffs until a Geneva agreement in May 2025 resulted in the US cutting rates to ~30% and China cutting rates to ~10%.

Seemingly from one day to the next, CEOs have woken up to another new geopolitical risk to synthesise.

It is believed that there are tens of thousands of centrifuges scattered across the country and any enriched uranium Iran may have has now been secreted away. The risks remain. Consequently, Mossad is likely to continue mowing the lawn to keep Iran on the back foot. Regime change is not expected in the short or medium term. Asymmetric responses could arise. For example, the threat to close the Strait of Hormuz, which would materially impact oil prices. Goldman Sachs warned prices could jump to $110 per barrel if flows were halved for a month.

What is the most concerning risk from the Iran situation?

Continued Mossad operations against Iran
Closure of the Strait of Hormuz
Oil price spike to $110 per barrel

On the Iran/Israel conflict, it is unlikely that Iran has lost its capability to develop a nuclear weapon, regardless of President Trump's hopes that the brief war was a 'One and done' situation. The country's telegraphed response is widely considered a shrewd move. They fired a series of ballistic missiles on a US military base in Qatar with advanced warning. As a result, there were no casualties.

Trump's second term as President of the United States has been somewhat of a shock to the global political system in relation to global trade and economic policies. The trade tariff war with China has unknown consequences that CEOs have to try and manage in their global book of business. The impact on commodity prices, consumer goods, electronics/AI supply chains – specifically semiconductors – are myriad and hard for anyone to accurately quantify.

Trump's tariff shock in 2025 might draw comparisons to another US president, Richard Nixon, who, in 1971, acted unilaterally to kill the Bretton Woods system and the gold-dollar peg. The result was global floating exchange rates. Trump might have reason to question global economic imbalances but there are limitations to using tariffs as a solution.

Europe is nowhere near finding a decent response to the Trump shock. Under this transactional US president, European leaders are being put to task to more substantially fund its future defence and security. Having faced multiple wake-up calls in recent years, Europe is grasping the nettle. At last month's NATO Summit, European countries agreed to raise the minimum defence spending target from 2% to 5% of GDP by 2035. The message is that Europe needs to take care of its own back garden, and face up to the ongoing war in Ukraine as the US turns its focus towards an increasingly assertive China.

This could well be the single greatest defining challenge of the 21st century that sees the US and China play 3D chess; each looking for a way to assert its influence technologically, militarily and economically.