Geopolitical “Bad Actors” Take Center Stage
According to the survey, the institutional investors identified geopolitical “bad actors” as their primary worry. This was followed by declining consumer spending, potential central bank policy errors, and China’s struggling economy. Natixis attributed the shift in concern to the current geopolitical uncertainty.
The survey highlighted the impact of the Russian invasion of Ukraine and the subsequent energy and food price spikes in 2022. Institutions now view the geopolitical landscape as increasingly unstable, which reinforces their apprehension.
Continuous Geopolitical Conflicts
While geopolitical risks rank fifth in Natixis’ 2022 year-end survey, ongoing conflicts have since elevated their significance. The ongoing conflict between Moscow and Kyiv throughout 2023, coupled with the Hamas attack on Israel in October, introduced new geopolitical risks to the market.
Jamie Dimon, CEO of JPMorgan Chase, expressed his concerns about the current geopolitical environment. In an interview with the UK’s the Sunday Times, Dimon stated that the world had become more “scary and unpredictable” in 2023. He compared the gravity of the current geopolitical landscape to that of 1938 when Nazi Germany annexed parts of Czechoslovakia and intensified persecution against Jewish people.
Inevitable Recession and Artificial Intelligence Investments
The survey also revealed that 51% of institutional investors believe a recession is inevitable in 2024. Furthermore, 74% of this group anticipates it to be a “painful or very painful” one.
On the subject of investment opportunities, three-quarters of respondents expressed belief that artificial intelligence would unlock new avenues. However, 38% expressed concerns about the technology posing an existential threat to civilization as we know it.