How Geopolitical Tensions Affect The Stock Market?

What Are Different Geopolitical Tensions In The World?

Before we speak about how geopolitical tensions affect the stock market, we should know about different tensions happening across the globe.

The most important geopolitical tensions happening in the world are as follows:

• The Russia-Ukraine war, is currently the most important war in the world, affecting all over the world from different aspects, also has different effects on eastern European countries and western Europe
• Tensions between the United States of America, and China, this geopolitical tension are growing and are multi-dimensional with serious effects on the world including the stock market across the world
• Tensions in the Asia Pacific, from North Korea to increasing tensions among Japan and South Korea with China and North Korea
• Tensions in the Middle East, among Israel and Arabian countries with Iran
• Also, tensions between the United States of America, and Russia directly and indirectly, multifaceted tension with serious effects on different aspects of the world including the economy and the stock markets of the world

As you can see, in 2023, there will be more geopolitical tensions than ever.

We can also add to this tension in central Asia and other parts of the world, affecting whole countries as we are living in a global and connected world.

How do Geopolitical Tensions Affect The Stock Market?

Now, in this section of this article by Aron Groups Broker, we want to answer a very important question.

How do geopolitical tensions affect the stock market?

#1. Increasing Value Of The Military Companies

Military companies of the stock markets across the world are among the winners of the geopolitical tensions happening in the world.

• Governments are spending more money to build new military equipment, and this capital flows into the military companies
• Also, one of the most important factors of the geopolitical tensions affecting the military companies of the stock market is that this will increase the demand for these companies and their value will keep rising over time

#2. Increasing Value Of The AI Companies

One of the direct effects of geopolitical tensions on the stock markets in the world is the increasing value of AI companies. Why?

• AI is used more than ever in military equipment, and this need is growing faster than ever
• AI companies are very important and are among the top winners in periods of growing geopolitical tensions across the world

#3. Increasing Value Of The Food Companies

How do geopolitical tensions affect the food companies of the stock markets across the globe?

• In these risky times with wars in different locations, food becomes more important than ever
• With increasing tensions, there will be no more immigration and demand for food by both people and governments in the world

Food companies will experience growth, although they will have serious issues with supplying ramaterialsal and increasing costs of production.

#4. Decreasing Value Of The Consumer Companies

Geopolitical tensions have negative effects on the consumer companies of the stock market.

• The reason is very clear, as tensions are increasing, using different products for entertainment will decrease and people will focus on being healthy and alive
• Also, the majority of the capital will be devoted he food and military equipment, and there will be very lower money for growth and development in the consumer sector

Consumer companies are losers of geopolitical tensions in the world, especially when these tensions are increasing, and the risk of war is more serious than ever.

#5. Decreasing Value Of The Tourism Companies

Tourism is a big loser of the geopolitical tensions in the world, different geopolitical tensions affect negatively the tourism companies of the stock market.

• Tourism flourishes when different countries are good and working together are and then becomes in its lowest level tlehen the security risks increases
• While higher security risks will avoid people from traveling, in the war, tourism will reach its lowest levels, and tourism companies will miss their incomes

Tourism companies are varied from airlines to hotels, and the companies offer different travel malignant services.

#6. Increasing Value Of The Infrastructure Companies

Geopolitical tension’s effect on the infrastructure companies of the stock market is positive.

• To increase their resilience, governments will start investing in their infrastructure in different areas
• Infrastructure is very important for countries, and in risky times with growing tensions, more capital will flow into the infrastructure companies

#7. Increasing Value Of The Immigration Companies

When Russia started the war with Ukraine, $300k Russian citizens immigrated to safer countries.

One of the most important geopolitical tensions effects is on the immigration companies of the stock markets across the world.

• This especially becomes more important when the risks become more serious, and a war starts

#8. Increasing Value Of The Real Estate Companies

With the same immigration, real estate prices will increase in safer places when geopolitical tensions increase in the world.

• We can see this geopolitical tension affects the stock market by monitoring the REITs prices

#9. Decreasing Value Of The Consumer Technology Companies

Geopolitical tensions will decrease the value of consumer technology companies as people are worried about their life, and want to focus on a safe place to live and how to have enough food.

#10. Decreasing Value Of The Overall Stock Market

How do geopolitical tensions affect the stock market?

We spoke about the different industries in the past parts of this article, but will it happen to the overall market?

• In war times, the landscape is negative, and people want to have cash for food and immigration
• Also, there is no view of the economic growth

All of these will decrease the value Of the overall stock market in different countries of the world.