Geopolitics and the markets: buckle up at IMCA


The big geopolitical issues facing the world will take a prominent place for discussion at this year’s annual conference of the Investment Management Consultants Association (IMCA Australia), taking place in Sydney and Melbourne on September 19 and 20.

Michael Thawley, a former Australian ambassador to the US and head of the department of Prime Minister and Cabinet, says: “We’re in a world where politics and policies are having a huge impact on industries… This period is unusual because of the level of uncertainty.”

Thawley, who is a political economist at Capital Group in the US, will address the big macro issues, together with Professor Michael Gallmeyer of the University of Virginia, in the first session, chaired by Greg Wilkinson of JANA Investment Advisers.

Thawley said last week that the three big themes, which all intersect, were:

. The end of the era, since World War II, of globalisation and open economies. The last phase was the quantitative easing and the vast expansion of credit to counter the global financial crisis. The future sources for growth are not so obvious, Thawley says. “We won’t see another China to fuel that growth.”

. Western democracies are in a “nervous crisis”, with 30-40 per cent of the electorates in most countries believing that they are alienated. Governments are weak, often minorities, with leaders who are not empowered to make the changes that they think are necessary. “There’s a sense that more authoritarian approaches might be better. There’s a lack of confidence about the prospects for democracy.”

. A question over strategic stability, particularly in Asia. “There’s a question over the will of the US to maintain the world balance… No-one can be totally confident about what’s likely to follow. The key issue is the relationship between China and the US.”

With respect to the markets, Thawley said, there would be new challenges and new opportunities for companies from policy changes. “We will see commerce and trade become more political. We will see governments occupying a larger share of the economy, and we will have to get used to more political interference. It will be an environment for careful investment.”


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