Geopolitics Do Not Hinder Investors: Funds Continue to Flood into High-Risk Assets

Despite escalating geopolitical tensions around the world, investors are showing a very high risk appetite. According to a Goldman Sachs report cited by ChainCatcher, the global markets have absorbed most of the macroeconomic concerns, with investor bullish sentiment now at the 67th percentile—highest in recent years.

Risk Appetite Index Reaches Five-Year High

Goldman Sachs’ proprietary risk appetite index has broken its highest level since Q2 2021. This achievement indicates that global investors are taking a highly aggressive stance in allocating their capital. The high risk appetite reflects market confidence that medium-term growth prospects remain promising, even as geopolitical challenges add volatility to the markets.

This phenomenon shows that abundant liquidity and supportive monetary policies continue to be dominant factors in investor asset allocation decisions. Concerns over escalating geopolitics are not strong enough to shift investor preferences away from high-risk instruments.

Capital Flows Flood into High-Risk Assets and Global Equities

Investment funds continue to flow heavily into high-risk instruments, with a positive allocation bias specifically toward the equity sector. Investors are confident that volatility triggered by geopolitical factors is temporary, while long-term growth opportunities are more substantial. This strategy reflects a risk-reward calculation favoring equities over defensive instruments.

Global Expansion: International Capital Accelerates Penetration into Emerging Markets

On the global front, international capital flows show a significant acceleration toward three main destinations: Europe, Japan, and emerging markets. This pattern reveals a deliberate geographic diversification by institutional investors. They are not only focusing on traditional developed markets but are increasingly optimistic about growth potential in emerging economies with more attractive valuations.

This expansion strategy is driven by the assessment that, despite widespread geopolitical risks, opportunities in emerging markets still offer superior return prospects compared to saturated markets. The flow of capital into these regions confirms that bullish investor sentiment is truly creating market dynamics resilient to external shocks.