The International Monetary Fund (IMF) has issued a warning that increasing geopolitical risks could lead to significant declines in stock prices. IMF mentioned in the forthcoming Global Financial Stability Report to be released during the spring meetings starting on April 21, that escalating geopolitical risks, including developments causing trade tensions, could result in substantial corrections in stock prices. While not specifically referring to certain actions such as the additional tariffs announced by U.S. President Donald Trump in recent weeks, IMF pointed out that conflicts, wars, terrorist attacks, military expenditures, and trade restrictions have led to a sharp increase in news-based risk measurements since 2022. According to the report, research shows that major risk factors like wars, events causing diplomatic tensions, or terrorism have pulled down stock prices by an average of one percent monthly across all countries, and by 2.5 percent in emerging markets. Wars such as Russia’s invasion of Ukraine in 2022 have been the main drivers of risk, causing stock returns to decrease by an average of 5 percent monthly. Conflicts have led to a two-fold greater decline in stock returns compared to other geopolitical risk factors. IMF also stated that economic uncertainty has increased tail risks in investment portfolios, defined as the possibility of excessive and unexpected losses, which in turn raises the risk of a stock market crash.