Taiwan Invasion Risk
-3%
Taiwan Strait Tensions
Market Assessment of Geopolitical Risk
Li Wei
Aug 8, 2025
7 min read
Geopolitical Risk Assessment
Prediction markets continue to price elevated but not extreme risk of military escalation in the Taiwan Strait, with probabilities fluctuating based on diplomatic developments and military posturing.
Key Risk Factors
- Military Activity — Increased PLA exercises in the region
- Diplomatic Tensions — High-level visits and official statements
- Economic Pressure — Trade restrictions and sanctions risks
Market Interpretation
Current 18% invasion probability reflects serious but not imminent risk assessment. Historical analysis suggests markets tend to overprice near-term escalation while underpricing longer-term structural risks.