The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Peter Thal Larsen

LONDON, Oct 12 (Reuters Breakingviews) - Welcome back! Can you name the G7 country that gained a probable new prime minister this week, and the other that lost its newly installed leader after less than a month? Investors are paying close attention to the turmoil at the top – perhaps too much. As always, email me with any ideas or feedback. And if you’re not already a subscriber, sign up for a free trial of Breakingviews here.

OPENING LINE

“When it comes to finding black gold, oil companies have easier places to look than in the ground.”

Read more: Canadian M&A battle is about oil’s murky future.

FIVE THINGS I LEARNED FROM BREAKINGVIEWS THIS WEEK

1. It took 15 years for the Nasdaq Composite Index to surpass its March 2000 peak.

2. The investment required to open a new copper mine has increased by 65% since 2020.

3. Almost 90% of Hang Seng Bank’s 0011.HK commercial property portfolio has “a significant increase in credit risk” or worse.

4. If Shell SHEL.L, Experian EXPN.L, RELX REL.L and Compass CPG.L follow AstraZeneca AZN.L in pursuing a direct listing in New York, the UK could lose 840 million pounds in tax.

5. Large Wall Street banks’ trading assets have risen by 30% since 2022, but their reported value at risk has fallen 15%.

KEEP CALM AND CARRY ON BUYING

It’s a cliché to say we live in turbulent times. It also happens to be true. The speed and frequency of political and economic upheaval in Western democracies since 2008 is unlike anything most people experienced in previous decades. Financial markets, too, appear more sensitive to sudden geopolitical shocks. Two events in the past week illustrate the point.

Last Saturday, Sanae Takaichi was elected leader of Japan’s Liberal Democratic Party, making her the favourite to be the country’s next – and first female – prime minister. The surprise result rippled through markets. Over the next week the yen fell by 3.5% against the U.S. dollar, while the Nikkei 225 stock market index gained 5%.

Then on Monday Sébastien Lecornu offered his resignation as French prime minister, just a month after taking office and a day after appointing senior cabinet members. The prospect of losing a third prime minister in less than a year knocked French stocks and pushed up yields on 10-year sovereign bonds, briefly lifting them above the yield on equivalent Italian government debt for the first time since the euro was created.

There’s a basic logic to these knee-jerk reactions. Takaichi has advocated for looser fiscal and monetary policy in Japan. Investors in France are increasingly wondering whether the country’s political system can deliver a government capable of pushing through a credible budget plan.

Nevertheless, experience suggests political events are rarely as seismic as they first seem. Takaichi’s party has ruled Japan for almost the entire post-war era. She will face institutional and parliamentary constraints, not least from the LDP’s junior partner, which responded to her success by quitting the coalition. Meanwhile, other European countries have shown remarkable resilience as successive prime ministers step into the revolving door. Just look at Italy, which is now a model of stability, in relative terms.

Besides, the financial fallout is often muted when genuinely dramatic things happen. JPMorgan analysts studied the market aftermath of a series of major historical events, including the Gulf War, the Cuban Missile Crisis, and the Japanese attack on Pearl Harbor. Over the following six or 12 months, markets behaved much as in calmer times. “When you consider the average equity investor experience, it’s as though the event never happened,” the analysts conclude.

For real-time proof of the theory, look at Donald Trump. In just over nine months the U.S. president has upended the global trade order, alienated international allies, challenged the independence of the Federal Reserve, undermined the constitution, and attacked the rule of law. Yet glance at a chart of the stock market or government bond yields and it’s hard to see much amiss. Even the two-week upheaval that followed the “Liberation Day” tariffs in April now looks like a blip.

Of course, these developments may have dramatic consequences for many of the people directly affected by them. For investors, though, they’re often a non-event.

CHART OF THE WEEK

Have banks become like utilities: safe but dull? The sentiment was widespread after the 2008 financial crisis, as regulators rammed through tough new rules. Yet even though lenders were stuffed full of extra capital, investors did not treat them as if they were safer. Now the implied cost of equity for big banks is falling. Less clear is whether this is due to increased safety, or simply renewed complacency among investors.

THE WEEK IN PODCASTS

Big insurance companies are in a state of flux. Costly natural disasters are occurring more often, while technology is allowing the industry to pinpoint risks with greater accuracy. On The Big View, I talked to Mario Greco, the CEO of Zurich Insurance ZURN.S, about how the $100 billion Swiss group is navigating this new landscape.

Over on the Viewsroom, George Hay and Liam Proud joined Jonathan Guilford to talk about the record-breaking $55 billion buyout of Electronic Arts EA.O by Saudi’s sovereign fund and buyout shop Silver Lake, and how the deal turns received wisdom about mega-takeovers on its head.

PARTING SHOT

The world’s two largest economies are conducting a real-time experiment in artificial intelligence. In the United States, the largest tech firms are spending hundreds of billions of dollars on advanced chips and data centres to build the most sophisticated models. In China, meanwhile, local tech giants like Alibaba 9988.HK and Tencent 0700.HK are also cranking up investment, but from a much lower base. AI capital spending in the People’s Republic this year will be just a fifth of what U.S. firms are expected to deploy. Many investors believe that the U.S. frenzy is inflating a bubble. Others worry that China is getting left behind. They cannot both be right.

Want to receive The Week in Breakingviews in your inbox every Saturday? Sign up for the newsletter here.

Follow Peter Thal Larsen on Bluesky and LinkedIn.

(Editing by Liam Proud; Production by Oliver Taslic)

((For previous columns by the author, Reuters customers can click on LARSEN/peter.thal.larsen@thomsonreuters.com))