{"text":[[{"start":8.33,"text":"The biggest geopolitical risk to markets next year is Ukraine, and investors have no clue how to handle it. "}],[{"start":14.41,"text":"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. "},{"start":23.689,"text":"Given that, now is the time for money managers to at least think about how they would respond if peace broke out. "}],[{"start":30.28,"text":"This still, sadly, often feels like a distant prospect, but several factors call for a little forward planning. "},{"start":37.134,"text":"One is that Vladimir Putin’s foreign adventures are unravelling at speed — most notably, of course, in Syria. "},{"start":43.652,"text":"Meanwhile, Donald Trump has spoken repeatedly about his desire to cut off support for Ukraine when he returns to the White House in January. "},{"start":51.107,"text":"If he’s serious (and who knows? "},{"start":53.287000000000006,"text":"that suggests the embattled nation could be bumped in to talks, or talks about talks, at some point next year. "},{"start":59.329,"text":"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. "}],[{"start":67.06,"text":"And if the past two weeks have taught us nothing else, it is that geopolitics can move quickly. "},{"start":72.364,"text":"If you had South Korean martial law and a Syrian revolution on your watch list for this month then you have done a better job than many supposed world affairs experts. "}],[{"start":81.28,"text":"The space where geopolitics and markets meet is grimly matter-of-fact. "},{"start":85.447,"text":"Yes, fund managers care on a personal level about what has been happening in Gaza since late 2023, but it has not been a hugely market-moving conflict. "},{"start":93.864,"text":"This year has brought the occasional pop higher in oil prices, but most investors have been able to watch events from the sidelines without worrying that it will damage portfolios. "},{"start":102.669,"text":"Israel’s economy is too small to make a huge difference, and Iran is not the oil powerhouse it once was. "}],[{"start":109.01,"text":"The conflict in Ukraine is different, because a resolution would not only lift a dark cloud from over European stocks, but could also force stocks higher in anticipation of a major splurge of reconstruction spending. "},{"start":120.06400000000001,"text":"This could be particularly powerful precisely because the mood among fund managers on Europe is so dire. "},{"start":125.53200000000001,"text":"The American exceptionalism theme has become such a thumping consensus since Trump’s re-election that few other big investment narratives are given space to breathe. "},{"start":133.349,"text":"This would leave many fund managers on the wrong side of an outbreak of good news. "}],[{"start":138.32,"text":"“We have been debating this quite a lot,” says Michael Kelly, head of multi-asset at PineBridge Investments. "},{"start":144.31199999999998,"text":"“Even if you take Trump out of the equation,” running unusually large positive bets on US stocks relative to the rest of the world, including Europe, still makes sense, Kelly adds. "},{"start":154.179,"text":"The US boasts economic growth of which the rest of the developed world is envious, and has left the others for dust in the big tech and artificial intelligence bonanza. "}],[{"start":163.26,"text":"With investors’ eyes locked on the US, “it would be a difficult moment for markets” if peace, or even the hint of a path to peace, were to send Europe sprinting higher. "}],[{"start":172.75,"text":"Fund managers say one tricky element here, setting aside the ghastly possibility that matters for Ukraine could still get worse, is that “peace” or “a deal” mean different things to different people. "},{"start":182.879,"text":"No reasonable person would celebrate peace at any cost to the Ukrainians, and a mere ceasefire, while positive, would still not open up an immediate path for reconstruction to begin. "}],[{"start":193.37,"text":"Alexandra Morris, investment director at Skagen in Norway, has been mapping out which European countries, and which engineering or construction companies inside them, could play the greatest role there, for some time. "},{"start":204.924,"text":"“It certainly would be a big welcome for the European construction industry, and the value chain connected to it,” she said, pointing out that the estimated cost over a decade to rebuild Ukraine would come close to half a trillion dollars, according to the UN. "}],[{"start":218.79000000000002,"text":"That is substantial enough to provide a meaningful economic boost to Europe, even assuming the bloc does not turn the taps back on for Russian oil and gas in the short term. "}],[{"start":228.28000000000003,"text":"Some investors are willing to accept they may miss early gains from the Ukraine reconstruction trade while they nestle in the safety of supercharged US markets, and indeed for many that is a rational choice. "},{"start":238.60900000000004,"text":"“It might be next year or it might be 2026, so how far do you want to put your foot in? ”"},{"start":243.57700000000003,"text":"says Lori Heinel, chief investment officer at State Street Global Advisors. "}],[{"start":248.52000000000004,"text":"But this is a big and obvious potential positive wild card in unloved European markets, and too few investors are taking it seriously. "}],[{"start":255.80000000000004,"text":""}]],"url":"https://creatives.ftmailbox.cn/album/184506-1733891979.mp3"}