The fast-evolving situation in Afghanistan must be added to investors’ growing list of global issues to track as stock markets digest that the Taliban are back in power, warns Nigel Green, chief executive and founder of deVere Group.
This week the Taliban seized the capital Kabul, after US President Joe Biden’s decision to remove troops from Afghanistan after Donald Trump’s concessions to withdraw US forces as part of a conditional agreement between the US and Taliban leaders.
Green says: “Despite the news coming out of Afghanistan, there is not likely to be an immediate shockwave rippling through global stock markets.
“Investors are currently more focused on other key factors that could impact returns. These include the fallout from the delta variant of Covid, concerns about peak earnings, disappointing Chinese economic data, slowing growth, and this week’s publication of the minutes of the Federal Reserve’s latest meeting which could hint at a shift in policy.”
He continues: “However, the major geopolitical turbulence triggered by the Taliban’s effective power grab will certainly be added to investors’ growing list of global issues to track as it could have longer-term implications for markets.
“There will be questions regarding stability in the Middle East, the global influence of the US and the mounting pressure on Biden, the prospect of increasing international terror threats, and the growing dominance of China’s renminbi.”
Green concludes: “Investors will be monitoring the Afghanistan situation carefully as it could very likely have implications down the road.
“As ever, investors’ best tool to avoid risk and seize opportunities is to remain invested and ensure proper diversification across asset class, sectors, currencies and regions.”
