地政学的地域
European assets are selling off as investors panic about the upcoming French election. Is this panic justified, and if so, for how long?
Europe did not witness a major policy reversal. Inflationary pressures are coming down, enabling the ECB to cut rates and European states to maintain soft budgets. Geopolitical challenges ensure that European parties continue to cooperate on national defense, economic security, and energy security.
Prime Minister Narendra Modi won a third term and will become the third longest-serving prime minister of India. While investors responded negatively to the BJP’s loss of an outright majority, Modi and the NDA will continue to perpetuate the reforms they have already put into motion. The result also affirms that Indian democracy continues to thrive, contrary to the narrative that Modi had formed an authoritarian grip on the country, a view we always rejected.
MORENA has once again swept the Mexican election: Claudia Sheinbaum will be president, with little to no constraint in Congress. All in all, Mexican politics will remain stable and overall supportive of markets. In the medium term, fiscal spending will return to conservatism and the constitutional reforms will lead to mixed fiscal and economic repercussions. In the long term, however, fiscal and institutional risks will rise. We advise investors to remain overweight Mexican risk assets relative to EM in cyclical and structural time horizons, but prepare for Mexican markets to sell off in absolute and relative terms in the next couple of months.
The death of the Iranian president reinforces our base case view of Middle Eastern instability and at least minor oil supply shocks. Rapid geopolitical developments in recent weeks are pointing to a new bout of global instability. The US is hobbled by its election. Conflicts with Russia, China, and Iran are all now escalating at the same time, at least marginally. Investors should reduce risk and shift to more defensive assets, markets, and sectors.
The stock market will suffer a setback from the weakening labor market and a rebound in US and global policy uncertainty.
Modi and the BJP are at or near the peak of their political dominance, and their third term will be challenging as they must deal with harder reforms amidst a slowing domestic and global economic environment. In the long run, however, we remain constructive on India’s prospects, as its geopolitical and economic positioning are favorable and improving.