Strategy & Head of Equity Research
July 15 2019
The upcoming meeting (22 July) between US President Donald Trump and Pakistan Prime Minister Imran Khan will be worth watching, if for no other reason than to see how the pair might interact following their Twitter spat from November 2018.
However, the meeting is not going to change the gravitational, geopolitical pull on countries in South and East Asia between the US and China, and, in the case of Central Asia, between the US, China and Russia (Figure 1).
We suggest ignoring the mainstream media tropes, which are likely to litter coverage of the trip ("duplicitous Pakistan must do more" on the one side, and "the hypocritical US abandons its allies when it no longer needs them", on the other). Instead, the meeting should be a reminder of two factors for investors in South Asia:
Geopolitical risk matters: In the last decade, Egypt, Lebanon, Pakistan, Qatar, Saudi Arabia, Sri Lanka, Turkey and Vietnam are all examples of top-down investment cases over-run, for a period of time at least, by discussions on location and international relations, rather than growth and valuation.
Figure 1: Geopolitical competition in South and Central Asia
Source: Tellimer Research
Figure 2: Trump wants to draw down US troops in Afghansiation
Source: US DOD, NYT, WSJ, WP, CENTCOM
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