The new year is only a few days old, but has already seen its first major geopolitical development: Venezuelan President Nicolás Maduro and his wife were arrested by US forces in Caracas and brought to the United States. According to US Attorney General Pam Bondi, who posted on the social media service X, they will face trial there on charges including drug trafficking and weapons possession and production. This development marks a turning point for the country and raises questions about Venezuela’s future and the role of the US in the Western Hemisphere.
President Donald Trump has announced that the US will administer Venezuela during a transitional phase. He also emphasized that US access to Venezuela’s oil reserves—which, according to estimates, are the largest in the world—is a key motive for the intervention. The administration stated that investments are intended to revitalize the oil sector, for the benefit of the population but also to enable profits for US oil companies. According to Trump, these companies will invest billions over the coming years.
How successful this endeavor will be remains to be seen. What is clear is that the list of challenges is long and complex: Since Hugo Chávez took power in 1999, there has been a lack of capital for investment and access to skilled labor. The complex debt restructuring is also likely to delay the country’s return to international trade. Additionally, rebuilding could face obstacles related to governance and security. Much will depend on how well cooperation with Venezuela’s interim president, Delcy Rodríguez, functions. Although President Trump has not ruled out the presence of US troops in Venezuela, history has shown how difficult it can be to stabilize—or even transform—a fragile country. A look at oil prices suggests that markets are not yet expecting additional Venezuelan barrels: The price of crude oil has barely reacted to the intervention.
The arrest of President Maduro also raises the question whether other governments could face a similar fate, and how the markets would react. With this intervention, the US government has clearly asserted its claim to leadership in the Western Hemisphere, demonstrating both the capability and the political will for such militarily demanding undertakings, while simultaneously reaffirming its leadership role for the entire region—a role that, in recent years, has increasingly been challenged by countries like China and Russia. President Trump also publicly suggested the possibility of similar actions against other governments, for example in Colombia, Cuba, or Iran.
If that is the case, investors will have to contend with geopolitical tensions this year as well. The extent to which markets would be affected would depend on whether any crisis remains locally contained—as has been the case so far with Venezuela or the war in the Middle East—or whether markets begin to price in the possibility of a regional conflict, or in the worst case, a proxy war between the US and Russia and/or China. While this may seem concerning, we consider a regional conflict unlikely. Moreover, history has shown that local geopolitical shocks usually have only a limited impact on a globally diversified portfolio. The current situation in Venezuela thus confirms that even major political upheavals in a single country do not necessarily lead to severe market disruptions.
More important market drivers—such as corporate earnings and monetary or fiscal policy decisions—are typically hardly influenced by geopolitical factors. From an investor’s perspective, it therefore seems more important to monitor the development of these factors. Our outlook in this regard remains positive. We believe that a diversified portfolio can again deliver significantly higher returns this year than cash or savings deposits, and thus remains the optimal tool for long-term wealth preservation and growth. Simply put, if it ain’t broke, don’t fix it. Structured strategies can also help to hedge risks, generate income, and/or systematically build up equity exposure. Especially for conservative investors, this should be a better strategy than hoarding excessive savings in a zero-interest-rate environment.
