Vatican leadership change could impact global markets

Investing.com -- The selection of a new Pope following Pope Francis’s passing could have significant implications for global markets, according to the founder and CEO of a global financial advisory firm deVere. The Vatican, beyond being a religious institution, has considerable influence as a sovereign entity with worldwide reach, and its decisions could impact policy, capital flows, and risk sentiment.

The CEO, Nigel Green, suggests that the next Pope’s influence will extend beyond the 1.4 billion Catholics worldwide, shaping public discourse on issues like capitalism, climate change, immigration, and inequality. These issues have become central to financial decision-making.

Pope Francis, who passed away on Monday at the age of 88, was known for his critiques of modern capitalism and his advocacy for environmental and social justice. His influence helped drive the momentum behind ESG (Environmental, Social, and Governance) investing before it became a mainstream trend.

The 135 cardinals, including about two dozen realistic contenders, will now decide the future direction of the Church’s influence. Green suggests that a conservative successor might strengthen nationalist currents in key economies, while a progressive figure could further the Church’s engagement with global justice and sustainability. This could impact market participants as ESG investing, influenced by ethical frameworks, has become a structural trend with trillions of dollars at stake.

Green also points out that the Church’s influence can extend to emerging markets, with Catholic populations growing in Africa and Asia. A non-European Pope could potentially shift institutional focus and capital towards these rapidly expanding regions.

The political context, however, cannot be overlooked. With President Trump back in the White House advocating faith-based conservatism, any alignment between Washington and Rome could significantly impact policy, particularly on immigration, regulation, and reproductive rights.

Green also remarks on the potential for political influence in the succession process, given Trump’s likely attendance at the Pope’s funeral and Vice President JD Vance’s final meeting with Pope Francis. While the Vatican officially resists external pressure, the optics of US engagement are being closely monitored.

At deVere, they believe that global power transitions, even those seemingly outside traditional economic arenas, warrant serious attention. Leadership changes in the Vatican, similar to those in Washington or Beijing, can have implications for risk and opportunity across asset classes.

While the papal succession won’t immediately affect markets in a single trading session, it could shape the broader environment in which investors operate, concludes Green.

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