The biggest geopolitical risk to markets next year is Ukraine, and investors have no clue how to handle it.
For investors, risks come in downside and upside form — missing a massive jump in a market can be almost as painful as suffering a decline in something you already own. Given that, now is the time for money managers to at least think about how they would respond if peace broke out.
This still, sadly, often feels like a distant prospect, but several factors call for a little forward planning. One is that Vladimir Putin’s foreign adventures are unravelling at speed — most notably, of course, in Syria. Meanwhile, Donald Trump has spoken repeatedly about his desire to cut off support for Ukraine when he returns to the White House in January. If he’s serious (and who knows?) that suggests the embattled nation could be bumped in to talks, or talks about talks, at some point next year. It is notable that investors have seized on many other policy utterances from the president-elect in recent months, but not at all on this.