Navigating Geoeconomic Risk in the U.S. Stock Market

Matteo Crosignani, Lina Han () and Marco Macchiavelli
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Lina Han: https://www.isenberg.umass.edu/people/lina-han-0

No 20261001, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Geoeconomic risk—the risk that firms incur valuation losses when countries deploy economic, trade, or financial leverage for geopolitical aims—has become a first-order concern for investors. In this post, based on our recent Staff Report, we document that domestic U.S. stocks expose investors to substantial geoeconomic risk through firms’ global supply-chain relationships, affecting investors’ returns and portfolio allocation. We also find that investors are compensated for bearing geoeconomic risk through higher risk premia.

Keywords: mutual funds; Asset allocation; geoeconomic risk; export controls (search for similar items in EconPapers)
JEL-codes: F38 F51 G12 (search for similar items in EconPapers)
Date: 2026-10-01
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DOI: 10.59576/lse.20261001

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