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Geopolitical Hotspots and Game Theory

October 12, 2016 | News


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Brian Singer, head of William Blair's Dynamic Allocation Strategies team, discussed how he applies game theory to assess the investment implications of several geopolitical hotspots across the globe on Bloomberg Asia's “Trending Business” TV program.

Singer highlighted that game theory is about strategic negotiation among players who use different powers to push the negotiation to their benefit. And understanding who has the power and how they're likely to use it is important in assessing how geopolitical events may impact the markets.

“Game theory doesn't predict the outcome, but it helps us understand what's happening, so we can try to anticipate what the implications are for the capital markets.”

— Brian Singer, head of William Blair’s Dynamic Allocation Strategies team

“[Game theory] doesn't predict the outcome, but it helps us understand what's happening, what's a bluff, what's not a bluff, and why they're doing what they're doing,” Singer said in the interview with anchor Angie Lau.

Singer goes on to discuss several geopolitical hotspots across the globe that his team is applying game theory analysis to help better understand their potential investing implications:

  • Biggest short-term geopolitical event: Spanish elections
  • Longer-term hotspot: Brexit
  • Asian region: Nine-dash line in South China Sea
  • U.S.: Presidential election

Despite elections in December 2015 and June 2016, Spain has been unable to form a coalition government, Singer noted, adding that the inability to form a government is a negotiation among several players, including the People's Party, Cuidadamos, Podemos, and the Socialist Party. “They haven't come to a resolution of that negotiation, and that's what we're looking to understand, so we can try to anticipate what the implications are for the capital markets,” Singer said.

When it comes to the U.S. Presidential election, Singer highlighted that populism is the key driver. He added that it's important to understand that populist movements don't stand for something—they stand against something. And, in this case Donald Trump represents a populist movement that's standing against the established elite.

“Sometimes the more outrageous that Trump is, the more he communicates that he is outside the norm, and it doesn't necessarily hurt him,” Singer told Bloomberg TV.

Watch Brian Singer's Bloomberg TV Interview

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Learn More: Game Theory

Read several other blog posts on game theory and macro investing by Brian Singer, head of William Blair's Dynamic Allocation Strategies team: