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Collaboration with GeoQuant will add GeoQuant’s geopolitical risk indicators to State Street’s existing suite of high-frequency inflation, institutional flow, media sentiment and risk indicators
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Capability will further enhance State Street’s market-leading macro strategy and quantitative research franchise
State Street Corporation announced that it has entered into an arrangement with GeoQuant, a Fitch Solutions Company, to make available geopolitical and country risk indicators produced and calculated by GeoQuant in State Street’s own macro strategy research. The GeoQuant indicators measure and predict political risk daily and systematically with a fusion of PhD-level political and computer science. The full suite of GeoQuant’s indicators are available on a subscription basis exclusively from GeoQuant. GeoQuant is also developing, with input from State Street, a new indicator designed to capture the links between geopolitical risk and market risk.
“Geopolitical events such as elections, political unrest, and economic policy decisions can have huge impacts on financial markets”
The GeoQuant indicators and commentary will be made available via the Global Markets Insights platform, which provides clients data-driven indicators and investment ideas derived from high-frequency inflation, media sentiment and investor flows, informed by data from State Street’s position as a servicer to $37.6 trillion in assets as of March 31, 2023. This capability enhances State Street Global Markets’ market-leading research franchise1 for the firm’s institutional clients globally.
“Geopolitical events such as elections, political unrest, and economic policy decisions can have huge impacts on financial markets,” said Will Kinlaw, head of research for State Street Global Markets. “Understanding the impact of these seismic events, from scheduled election cycles to sudden geopolitical unrest or flashpoints, is crucial to informing risk management analysis, asset allocation and portfolio construction. Our clients are increasingly seeking hard data, indicators and prediction models for these kinds of events, and by collaborating with GeoQuant we are able to bring quantitative rigor to an area that has historically been more challenging for investors to decipher and forecast.”
GeoQuant’s approach starts with the accepted “ground truths” in contemporary political science that define the core drivers of political change—explicitly and systematically measuring the fundamentals of political risk. It then uses computer science to integrate those fundamentals into real-time assessments of governance, social and security conditions, drawn from credible data and media sources locally, regionally and globally available across several languages. The result is systematic and adaptive data, with the potential to connect the dots between politics, economics and markets.
GeoQuant’s political risk indicators quantify 40+ political risks across 127 countries. The data is updated hourly by AI-machine learning algorithms and vetted daily by a global team of PhD-level political scientists and experts. GeoQuant indicators are designed to predict political risk both within and across countries, and can be integrated directly into economic and risk models.
“State Street is an ideal partner for integrating political risk more systematically into investment research, and ultimately investment decisions. We are thrilled to be working with their market-leading research team,” said Mark Y. Rosenberg, Founder and Co-Head of GeoQuant.
