Geopolitical advisory is the new “in” thing for corporates and investors

The growing influence of geopolitics on investment-making globally is pushing companies to bring in political expertise amid an increasingly fragmented world, the Financial Times writes. Tensions in our part of the world, the Biden-Trump showdown, and a shift in leadership elsewhere is putting politics in the equation for investors.

Political consultancy is the new thing: Political experts are back in fashion on Wall Street and beyond: “Those people are in high demand,” global asset management firm AllianceBernstein CEO Seth Bernstein said. “Every Wall Street firm is bringing around people like that for [investors] to meet… there’s a profound [political] realignment happening, and it does spook the hell out of me.”

A hiring spree: Boutique investment bank Lazard was among the first firms taking the lead to integrate political advisory for clients seeking guidance on investment in regions including China. It set up a dedicated unit in 2022 that has since expanded and was being involved in Lazard’s asset management division and its financial advisory clients. “In the past, the impulse was to remove politics from corporate decision making,” Theodore Bunzel, who leads Lazard’s advisory unit, said. That approach is now unthinkable due to “tension between large, interconnected powers.” Goldman Sachs set up a similar unit last year.

So many “hot conflicts” here and there: “I don’t recall a time where there were so many hot conflicts that affected so many markets,” hedge fund co-founder Harvey Sawikin said.

Geopolitics is turning inflationary: “Over the past 20 or 30 years, [geopolitics] has been deflationary, created lower risk and made it easier to invest,” British-American investment group CEO Janus Henderson said. “Going forward it is the complete opposite: it is probably inflationary; it is probably going to create more risk; and it is going to make it harder to invest.”

MARKETS THIS MORNING-

Major Asian benchmarks are all in the red this morning, and futures point to selling pressure on Wall Street at today’s market open. Major European benchmarks, meanwhile, were in the green in overnight trading — the big exception being France, where CAC 40 futures are down slightly as the country looks forward to what some think could be weeks of horse trading to form a new government.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.3% yesterday on turnover of SAR 3.9 bn. The index is down 2.3% YTD.

In the green: SRMG (+9.9%), Al Baha (+8.3%) and Medgulf (+8.0%).

In the red: Saudi Re (-6.7%), Anaam Holding (-4.4%) and Al Yamamah Steel (-3.7%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.9% yesterday on turnover of SAR 44.5 mn. The index is up 6.6% YTD.

In the green: Al Rasheed (+18.6%), Armah (+14.8%) and Neft Alsharq (+8.2%).

In the red: Bena (-12.4%), Ladun (-11.0%) and Alwasail Industrial (-6.1%)

CORPORATE ACTIONS-

Shareholders of Nomu-listed escalator company Mayar Holding have approved the board’s recommendation to issue SAR-denominated sukuk worth SAR 500 mn, according to a disclosure to Tadawul. The issuance program will be spread out across 24 months through a number of separate issues offered publicly in the market. It set a maximum number of new shares at 1 mn with a nominal value of SAR 0.5, with the board tasked with determining returns for the sukuk program.