Political risk back on the agenda

Political developments have once again taken centre stage over the past month. Most attention has focused on Thailand, where the army has staged a military coup. This may help to reduce uncertainty in the near-term, but it brings a lasting resolution of the political conflict no closer, and is likely to further undermine confidence in the country. Meanwhile, relations between Vietnam and China have taken a turn for the worse amid growing tensions in the South China Sea and a wave of anti-China protests across Vietnam. The unrest is likely to worry foreign investors, who have played a key role in the success of the country’s export sector in recent years. However, it is not all bad news. The election of Narendra Modi as the new prime minister of India has boosted the prospects of meaningful economic reform in the country.