A devastating explosion in a rebel-held village in Myanmar has left dozens dead, according to early reports. The blast, which occurred near the town of Loikaw in Kayah State, has sent shockwaves through a region already grappling with civil war. For the financial markets, this is a grim reminder of the volatility that geopolitical risk injects into an already fragile global economy.
Myanmar’s currency, the kyat, has been in freefall since the 2021 coup, and this latest tragedy adds an extra layer of uncertainty for investors. The human cost is the headline, but make no mistake: capital flight from Southeast Asia’s frontier markets will intensify. Gilt yields in London are unlikely to be directly affected, but the broader message is a bearish one for risk assets.
The international community, led by the UN and ASEAN, will condemn the attack. But as we have seen in Ukraine, words do not stop the flow of trade. The bottom line: this is a tragic event that underscores the fragility of emerging market stability.
Investors should hedge their bets, because when the fighting escalates, so does the cost of capital.
