The capture of Venezuela’s leader Nicolás Maduro, instability in the Middle East, Japan-China tensions and signs of civil unrest in the US have all set an uncertain tone at the start of 2026. While markets have shrugged off the likes of military action in Latin America and President Trump’s claims the US will take Greenland “one way or the other”, the uncertainty from recent events highlights a bigger trend.
Investors must navigate an increasingly volatile tripolar world shaped by the US, China, and a bloc of unaligned nations. Rapidly shifting power dynamics are redefining trade, security, and investment flows, making geopolitical awareness essential for portfolio resilience.
These are just a few examples of the situations professional investors will be continuing to monitor on behalf of clients. Russia’s war on Ukraine has entered its fourth year, the India-Pakistan conflict escalated last year, and China-Taiwan tensions have been rising.
Add to this a packed election calendar and the geopolitical backdrop is anything but calm. More than 40 countries will head to the polls this year, including the US midterms in November and key votes in Brazil (October), Peru (April), and Colombia (May). In Asia, Bangladesh (February) and Nepal (March) face elections amid recent Gen Z uprisings.
Why geopolitical reshuffling matters for investors
For years, global markets operated under the assumption of relative stability in a US-led world. Today’s tripolar structure introduces risks that can’t be ignored.
Looking ahead, we can expect supply chain disruption and commodity volatility, and greater potential for liquidity shocks. Diversification and careful position sizing are critical.
In areas where specialist expertise could make a difference, we favour actively-managed funds, complemented by passive strategies where appropriate to maintain cost efficiency – particularly in today’s environment.
While volatility could rise, where impacts are uneven across countries, sectors and asset classes, dispersion can also mean opportunities.
How these dynamics are shaping markets and portfolios – five examples
These dynamics are already influencing markets, from commodities and energy to defence and emerging markets.
1.Commodities
Gold, silver and copper surged in 2025 amid geopolitical tensions. Silver led all major asset classes (+150%), gold rose (+65%), and copper jumped 35% – its biggest gain since 2009.
South America’s copper production dominance means further turmoil could disrupt markets. And it’s not just copper. Tin and nickel may also feel the heat as supply chain politics intensify. Could trade restrictions disrupt nickel supply from Russia or Indonesia?
Gold and silver have long been seen as “safe haven” assets, and in 2025 they lived up to that reputation. A big driver was central bank buying, especially from emerging markets, as countries sought to diversify away from the US dollar. This fed into what’s called the “debasement trade”. We’ve seen investors buy gold to protect against the risk that heavy government borrowing and money printing could weaken the dollar and erode the real value of government bonds.
2.Energy
Global oil prices are vulnerable to geopolitical shocks. Shifts in power, production levels, and sudden supply disruptions can send ripples across energy markets.
The ongoing Russia-Ukraine conflict and instability in key producers like Iran and Venezuela add to the uncertainty, making oil one of the most politically sensitive commodities today.
Trump’s actions in Venezuela, which holds the world’s largest proven crude reserves (around 19% of global reserves, according to OPEC), fit perfectly into his cheap energy policy.
Canada and Venezuela are the two main countries with large amounts of heavy oil. It’s more viscous than lighter oil types and faces processing challenges, but this is exactly what refineries on the US’s south coast were built for. If they can get much cheaper oil from Venezuela as production is ramped up, why would they import the expensive stuff from the tar sand of Canada? Heavy oil is expensive to extract and process so it has the thinnest margins of all oil types.
But if Trump’s plan to control Venezuelan oil succeeds, could Canada’s heavy crude exports face competition from US oil majors?
3.Defence
With rising global tensions, defence stocks are typically expected to gain – supported by increased military budgets and demand for innovation, but also investor appetite for stable, government-backed revenues.
Trump’s recent military actions and calls for a 50% increase in US defence spending by 2027 could also influence global defence budgets. Pressure on NATO members to meet or exceed the 2% GDP spending target has already buoyed defence stocks.
Will rising geopolitical tensions drive sustained growth in defence spending globally? How exposed are defence firms to export restrictions or sanctions? These are the sorts of questions fund managers will be considering against an unstable political backdrop.
4.Government bonds
Geopolitical risks can drive debt issuance and volatility, and they’re transforming the landscape for government bonds.
While they have traditionally been considered a “safe haven”, and lower risk than shares in companies, that status is being tested. Are bond markets behaving differently? Recent crises have shown US Treasuries sometimes selling off instead of rallying, for example. It’s a reminder that markets are unpredictable and diversification is key.
At the same time, political instability could increase default risk for some sovereign issuers, while governments already stretched may issue more debt, putting pressure on long-term yields. Could this mean higher borrowing costs and implications for interest rates?
Investors should expect regional divergences, as we’re seeing interest rate policies vary across the world.
5.Emerging markets
US tariffs have been a headwind, but emerging market exports have remained resilient. Growing intra-emerging market trade has been reducing dependence on advanced economies, creating new growth corridors.
A key structural shift is that emerging market corporates are increasingly serving regional markets, making earnings growth less vulnerable to US or European cycles. Historically, a softer US dollar has also been supportive for emerging market equities.
While China remains a significant part of the emerging market universe, opportunities extend well beyond China. Countries such as India, Brazil, South Korea, South Africa and Mexico offer attractive prospects, driven by strong growth potential, public investment, resilient consumption and favourable demographics.
US-China relations and the trade truce expiry in October are key watchpoints, with both competing for influence in Latin America and other parts of the world too.
In summary, in today’s tripolar world – where the global order is being transformed –geopolitical awareness is crucial. For us, it’s a core part of our investment strategy. We believe flexibility, diversification, and active management will be key to navigating heightened uncertainty and unlocking investment opportunities.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
How the Autumn Budget impacts proactive, tax-efficient planning
Read now
