9 Sep 2024

Saturna’s Patrick Drum Article on Market Pricing of Geopolitical Conflict and Elections Published in InvestmentNews

News Article

Bellingham, WA, September 20, 2024 – Patrick Drum, MBA, CFA®, CFP®, portfolio manager and senior investment analyst at Saturna Capital, recently contributed an article to InvestmentNews, a leading source of news, analysis, and information for the financial advisory community. His article, “What’s the market pricing in — geopolitical conflict or elections?” discusses what current and upcoming world events the market is reacting to and how perception doesn’t always align with market pricing.

In this piece, Patrick Drum poses a central, pivotal question: are investors conflating what the market is pricing in with perceptions on what the market should price in as it relates to geopolitical risks? He answers this by explaining, “Oftentimes greater attention is focused on conflicts or geopolitical tensions rather than political risks, such as elections.”

By offering several examples from recent political events, Patrick Drum demonstrates his reasoning that political risk has a more tangible, though less-perceived impact on global markets. He discusses recent snap elections in France and the 2022 unveiling of the UK’s mini-budget as seismic events that caused noteworthy dips in the French stock market and British pound valuation, respectively.

Patrick Drum is quick to note, however, that the human toll and economic impact from conflict is not to be ignored. He explains that while conflicts such as those between Israel and Hamas have immediate, sizable impacts on markets such as Israel’s, their ripples are not necessarily felt regionally — let alone globally — with Middle Eastern countries such as Saudi Arabia not seeing any appreciable instability. “Many investors are often surprised by this,” Patrick Drum explains, “as they assume that volatility will emanate across all the countries in the region. This implies investors are more concerned with the national debt's sustainability than with war.”

In concluding, Patrick Drum encourages investors to exercise caution when selecting where to place their funds.

About Saturna Capital Corporation

Active Investing to Reflect Your Values

Saturna Capital Corporation, established in 1989 in Bellingham, Washington, USA, is a private, employee-owned investment adviser with US$9.1 billion in assets under management, providing investment advisory services to mutual funds, institutions, businesses, individuals, and endowments. Saturna Capital is adviser to the Amana Mutual Funds Trust, the oldest and largest family of funds in the US that follow principles of Islamic finance. Saturna Capital is also adviser to the US-based Sextant Mutual Funds and Saturna Sustainable Funds.

About the CFA Credential

The Chartered Financial Analyst (CFA) charter is a globally respected, graduate-level investment credential awarded by CFA Institute — the largest global association of investment professionals. There are currently more than 160,000 CFA charterholders working in 164 countries and regions. To earn the CFA charter, candidates must: 1) pass three sequential, six-hour examinations; 2) have at least four years of qualified professional investment experience; 3) join CFA Institute as members; and 4) commit to abide by, and annually reaffirm, their adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct. For more information visit www.cfainstitute.org.