Political Turbulence Poses Threat To Investments - Survey

Robbie Lawther

14 June 2017

Investors believe geopolitical risks are a greater threat to investments than the economy, according to a new Wells Fargo, Gallup survey.

The Wells Fargo & Gallup Investor and Retirement Optimism Index second quarter survey was conducted by telephone with 1,005 US-based investors between May 4 and May 7.

Over the past year, there have been several geopolitical events which have rocked the economy, including Britain’s vote to leave the European Union; Donald Trump taking the White House; and the recent result of the UK general election, which resulted in a hung parliament.

When asked about possible threats to the US investment climate in the coming year, 75 per cent of investors were "very or somewhat" worried about the impact of the various military and diplomatic conflicts happening around the world. Around 69 per cent of participants were worried about domestic political issues.

The overall performance of the economy was not so feared by investors, as only 49 per cent said they were "very or somewhat" worried about possible threats.

“Given recent headlines, it’s not surprising that investors are more concerned that geopolitical risks pose a greater threat to their investments than the economy,” said Brian Rehling, co-head of global fixed income strategy at Wells Fargo Investment Institute. “While the news may be concerning to investors, we advise clients not to let those anxieties impact their investment plan because that doesn’t change the underlying positive fundamentals of the economy.”