Watching out for the minefields

Thu Jun 1, 2006

Political risk analysis is a growing business, both inside and outside funds, as global uncertainty grows

Wherever they invest - in emerging markets, commodities, currencies or even the world's biggest stock markets - hedge funds are facing more uncertain terrain than ever before. Against a backdrop of global terrorism and ongoing war in the Middle East, the list of potential minefields is growing: Iran's drive to attain nuclear capabilities and the possibility of a U.S. military response, a wave of populist leaders rolling into power in Latin America, tensions between China and Japan, and a chill in relations between Russia and the United States.

Known for their savvy market insight, hedge funds might be expected to be able to profit from the volatility that such unease presents, and in many cases they do. "Hedge funds are opportunistic in the sense that they can take advantage of instability," says George Friedman, chief...

ISSN: 2151-1845 / CDC10004H

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