Viewpoint: Political Analysis in the Investment Landscape

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Key Takeaways:
+ Increasing need within financial services for on-going comprehensive political analysis.

+ Talent pool for political analysts is small and limited to consultancies and corporate sector.
+ During next two to three years of Brexit implications and changes, it will be increasingly Important for businesses to have macro and micro level analysis of all developments.

Political analysis is an area which has tended to be overlooked by the financial services industry, often overshadowed by its sister discipline, macroeconomics. After all, during times of peace and economic prosperity, when the geopolitical situation is benign in operating markets, why worry?

In recent times however, the global political landscape has started to shift. The collapse of markets in 2008, ongoing conflict in the Middle East, sanctions against Russia, the surprising outcomes of the US primaries and perhaps most notably and recently, the outcome of Britain’s referendum on EU membership and ensuing political fallout, have made for a world where even developed markets have become unpredictable.

In light of this, over the last 12 months, we have noticed an increased appetite within financial services for in-depth and rigorous political analysis. Typically, geopolitical research has been outsourced to consultancies that focus either on top-line coverage, political access or highly specialised bespoke projects, with comparatively few organisations having a dedicated in-house function. The exceptions are companies, often in the extractive industry, which operate in emerging and frontier markets where political outlooks are less certain. The analysis function in these organisations can usually be found combined with government affairs departments, looking predominantly at regulatory and political outreach, with forecasting and analysis being more of an afterthought; even then teams are not large in number.

Recently some of the world’s largest and most sophisticated investors have been building teams of individuals to help them navigate the complex period ahead. Limited demand has led to limited supply and as such the talent pool of these individuals within industry is small, confined for the most part to consultancy and the corporate sector. Often organisations are having to think laterally about how they source candidates for these roles, looking to academia, think-tanks and government in order to uncover talent, in what is a relatively new application for an established subject.

Over the coming months and years, as the UK negotiates its exit from Europe while dealing with potential independence referendums from Northern Ireland and Scotland, and the EU attempts to hold itself together by avoiding ‘contagion’, it is vital that businesses have a house view on these developments at both a macro and micro level to inform decision making. Complex scenario analysis and proprietary models, backed up by data and information from sources in government will be invaluable in what will prove to be a crucial time at both a national and company level.

With specific expertise in recruiting political analysts and 23 years of history supporting clients through multiple periods of instability and economic uncertainty, Sheffield Haworth is well placed to support in sourcing these individuals, in a permanent or advisory capacity.