Member-only story
How Hedge Funds Use Wargames to Prepare for a Chinese Invasion of Taiwan
The hedge fund industry has always relied on sophisticated strategies to navigate market uncertainties, but recently, a new frontier emerged: the use of wargames to simulate geopolitical crises. This technique, previously confined to military and government planning, is now being adopted by investment firms to understand the potential fallout of high-stakes conflicts like a Chinese invasion of Taiwan. Several hedge funds, including a British one, have run detailed wargames to forecast how such a scenario could impact global markets, particularly the highly fragile tech sector.
The story of hedge funds planning for this geopolitical crisis comes amid growing concerns about the possibility of China taking military action against Taiwan. Taiwan’s strategic importance in the global supply chain cannot be understated — its dominance in semiconductor manufacturing places it at the center of global technological infrastructure. Semiconductors power everything from smartphones to military hardware, and any disruption in Taiwan’s chip production could trigger an economic tsunami across industries. This is the backdrop for why hedge funds are turning to wargames: to model, predict, and prepare for what could become one of the most destabilising geopolitical events of this decade.
