SINGAPORE, Jan 5 (Reuters) – Global investors are facing a fresh surge in geopolitical risk after the U.S. capture of Venezuelan President Nicolas Maduro, although initial market reaction has been relatively devoid of nerves with oil volatile and safe-haven flows lifting gold.
Stocks rose buoyed by tech and defence sectors while the dollar advanced on Monday. [FRX/] [MKTS/GLOB]
Here are some comments from market analysts:
VISHNU VARATHAN, HEAD OF MACRO RESEARCH, ASIA EX-JAPAN, MIZUHO, SINGAPORE
“We are being reminded that geopolitical risks are much larger than some number cast on imports.
“The sanctions on Venezuela and their exceptional reliance on only oil exports … that means that the Venezuela regime change impact via trade channels, investment channels quite naturally is limited and ring-fenced. So that’s why you don’t get a huge selloff.
“The case and the question in mind is – Is broader LatAm stability at risk? The flow-through effects and all could be much greater.
“Clearly he’s (Trump) mentioned Cuba, now he’s also extended his warnings to Colombia and Mexico. I mean partly the population on the ground is in fact happy that Maduro is gone. But I think it’s less clear how the sentiment would turn against the U.S. if it’s not Venezuela, and particularly without the very significant benefits of the oil endowments, even if it’s other minerals.”
KYLE RODDA, SENIOR MARKET ANALYST, CAPITAL.COM, MELBOURNE
“The implications are limited in the short-term and relatively contained to the energy complex. We are definitely seeing a response in precious metals though and that’s the market front-running governments and upping their exposure to non-dollar (and non-fiat) alternatives. Otherwise, I think the markets are looking forward to what’s ahead rather than what happened on the weekend.”
TAI HUI, CHIEF MARKET STRATEGIST FOR ASIA-PACIFIC, J.P. MORGAN ASSET MANAGEMENT, HONG KONG
“The lack of reaction so far is because of two factors. Venezuela’s oil production relative to global output is small (around 1%). Years of under-investment means it won’t be able to ramp up production and add to global supply any time soon.
“It remains unclear what will happen to the new regime as President Trump announced the U.S. would be ‘running’ Venezuela in the short term. The impact on global markets would at most be through the energy market. Of course, there should be broader geopolitical implications from this event, but in my view, the financial markets are not very efficient in pricing such risks accurately.”
VASU MENON, MANAGING DIRECTOR FOR INVESTMENT STRATEGY, OCBC, SINGAPORE
“While President Trump has pledged U.S. industry support to revitalise oil production in the country (Venezuela), restoring operations will require significant time and substantial capital investment before the oil taps can be fully reopened. Supply disruptions amid ongoing political turmoil could push oil prices modestly higher in the short term.
“However, the impact may be limited, given that Venezuela is not currently a major oil producer. Production decisions by OPEC could also help stabilise prices. It remains to be seen whether the Trump administration has an appetite for more regime changes.
The strategic calculations are unfolding against the backdrop of a midterm election year, and developments are unpredictable. This uncertainty could keep oil prices supported. A more fraught geopolitical environment may buoy haven assets like precious metals.
“Overall, markets seem less vulnerable to geopolitical risks today, having survived a year of significant geopolitical events in 2025. There could be some skittish reaction to short-term surprises, but as seen last year, the impact might be fleeting.”
(Reporting by Rae Wee and Gregor Stuart Hunter in Singapore; Compiled by Ankur Banerjee; Editing by Shri Navaratnam)
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