LONDON: Geopolitical rivalries, including brewing trade battles between the United States and China, now top inflation as the biggest worry for sovereign wealth funds and central banks managing some US$22 trillion in assets, an Invesco survey shows.

The ratcheting up of conflict - from Russia’s war in Ukraine to trade restrictions - has loomed over global investors for several years, but with the inflation tide ebbing, and as nearly half the world’s population votes on new leaders, the tensions are now centre stage.

“This of course is the year of elections,” said Rod Ringrow, Invesco’s head of official institutions, adding: “Geopolitics has trumped inflation on both the short term and the long-term outlook.”

Some 83% of the survey respondents listed geopolitical tensions as their top near-term concern, surpassing the 73% who listed inflation.

Geopolitical fragmentation and protectionism also topped the list of worries for the coming decade for 86% of respondents.

Over the long term, respondents listed climate change as the second-biggest risk.

“Climate is mainstream now and the investment processes for the sovereign funds and the central banks are beginning to allocate capital to look at that and see how that impacts,” Ringrow said.

 - Reuters