The IMF has warned that increasing geopolitical risks could lead to significant drops in stock prices. The International Monetary Fund (IMF) stated that rising geopolitical risks, including developments causing trade tensions, could result in significant corrections in stock prices. Sharing a section of the Global Financial Stability Report to be released during the spring meetings starting on April 21, the IMF expressed concerns that the fluctuation caused by escalating geopolitical risks could jeopardize the stability of financial markets. While not specifically mentioning certain steps such as the additional tariffs announced by US President Donald Trump in recent weeks, the IMF highlighted that news-based risk measures related to conflicts, wars, terrorist attacks, military spending, and trade restrictions have sharply increased since 2022. According to the report, research shows that major risk factors such as wars, events causing diplomatic tension, or terrorism have pulled down stock prices by an average of 1% per month across all countries, with an average decline of 2.5% in emerging markets. While conflicts, such as Russia’s 2022 invasion of Ukraine, stand out as major risk factors, leading to a monthly average 5% decrease in stock returns. Conflicts caused twice as much decline in stock returns compared to other geopolitical risk factors. The IMF also noted that economic uncertainty has increased tail risks in investment portfolios, characterized by extreme and unexpected losses, raising the risk of a stock market crash.