Afghanistan turmoil adds to investors’ worry list

By George Prior

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 the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The warning from Nigel Green, chief executive and founder of deVere Group, follows the Taliban quickly seizing the capital Kabul where thousands of civilians desperate to flee thronged the airport.

It came after U.S. President Joe Biden’s controversial decision to remove troops from Afghanistan after Donald Trump’s concessions to withdraw U.S. forces as part of a conditional agreement between the U.S. and Taliban leaders.

Mr 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 U.S. and the mounting pressure on Biden, the prospect of increasing international terror threats, and the growing dominance of China’s renminbi.”

Early in trading in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4%. European markets are set to open lower on Tuesday as investors monitor the Afghanistan crisis.  On Wall Street, U.S. stock index futures were slightly lower after the Dow and S&P 500 on Monday closed at record highs.

The deVere CEO 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.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.