Financial markets keep geopolitical tensions at bay


 “The issues which are probably most important to understand is over the last month and a half, we have seen escalated tensions in Gaza, as well as in Russia and Ukraine, [and] most unfortunately in the last four or five days, the shooting down of the Malaysia flight 17. The markets have not seemingly reacted heavily to that,” Bradley Ziff, senior risk advisor at Misys, told CNBC Africa.

“You have seen isolated spikes, obviously related to Russia itself, their commodity prices, issues with regard to the [sanctions] that the US had put [in place], and what that’s going to mean to some of the larger Russian companies. By and large, the markets themselves, the exchanges, as well as the equity markets, the bourses, they’ve almost basically factored that in.”

Ziff added that if one goes as far back as the conflict in the Middle East, while it is now a hotspot for terror and insecurity, it would be impossible for all of the region’s financial institutions and processes to function effectively if the regions had to react to everything that was happening in neighbouring countries.


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“There has been a sense that these are fairly localised problems [with regard to Palestine and Israel], as opposed to thinking they will spread or have a systemic effect on broader markets,” said Ziff.

He added that the biggest concern at the moment would be for financial sectors, as they tended to be driven more by macro issues and regulatory topics. Geopolitical instability would then push financial sectors to tighten the reigns and keep their processes protected against any shocks.

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“We have found, especially in developing and emerging markets, that they have basically copied what the global regulators have asked for. The global regulators might contain 20 or 30 countries, but it’s really spread well beyond that,” said Ziff.

“Replicating those same types of fairly harsh – in many ways – capital restrictions, will keep the banks safe and keep the customers safe.”