Political Risk Premium Analysis: US-Denmark-Greenland Tensions

Now I have comprehensive information to provide a detailed analysis of how geopolitical ambitions conflicting with public opinion could create political risk premiums for US-Denmark related investments.

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The Trump administration has repeatedly stated its intention to acquire Greenland, citing national security and economic interests. Recent polling indicates that

US attempts to take control of Greenland, with opposition spanning party lines—including Republican support below 50% [1][2]. This creates a significant disconnect between governmental geopolitical ambitions and public opinion.

Denmark and the European Union have firmly rejected these ambitions. President von der Leyen has stated that “the sovereignty and integrity of the Kingdom of Denmark including Greenland is non-negotiable” [3]. In response, European allies are expected to increase military activity in Greenland to demonstrate that the island is adequately defended [3].

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When geopolitical ambitions conflict with public opinion, they create

—a key component of political risk. In the US-Denmark case:

• Danish pension funds
  (managing $782 billion in assets, with 26% invested in the US as of March 2025) are already re-assessing their US exposure [4]
• AkademikerPension
  (Denmark) announced divestment of all US Treasuries in January 2026, citing “weak U.S. government finances” and higher risk [5]
• Alecta
  (Sweden) sold most of its US bond holdings, citing increasing risk associated with US Treasuries and policy uncertainty [5]
• Approximately
  50% of Northern European clients
  are considering tilting away from US assets [5]

This demonstrates how geopolitical tensions translate directly into investment decisions, raising the

investors demand for holding US assets.

The 75% public opposition to Greenland annexation creates several risk factors:

Risk Factor	Impact on Investments
Policy Instability	Government may pursue unpopular policies, leading to political backlash and market volatility
Diplomatic Strain	US-Denmark relations deteriorate, affecting trade and investment agreements
Legislative Uncertainty	Congress is actively debating Greenland policy, creating regulatory unpredictability [6]
Reputational Risk	Companies associated with potentially coercive policies face consumer/investor backlash

When political risk rises, investors demand higher returns to compensate for uncertainty. This manifests as:

• Higher yields on US debt held by risk-averse foreign investors
• Lower price-to-earnings ratios for US companies with international exposure
• Increased insurance costs (political risk insurance)

Northern European investors represent significant US asset holders. Their systematic reduction of US exposure creates selling pressure, which can:

• Weaken the US dollar (which fell ~10% against major currencies in 2025) [5]
• Increase yields on US Treasuries as demand decreases
• Create market volatility that elevates perceived risk

If the US pursues aggressive annexation policies:

• NATO cohesion could be undermined, affecting defense-related investments
• Trade agreements with Denmark/Greenland could be jeopardized
• US companies may face retaliatory measures in European markets

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1. Defense & Security
   : Increased military spending but also uncertainty about NATO’s future
2. Energy
   : Arctic resource development becomes politicized
3. Financial Services
   : Danish pension divestment reduces demand for US financial products
4. Real Estate
   : Uncertainty about territorial changes affects cross-border property investments

• Diversification
  : Reducing US exposure in favor of less politically exposed markets
• Hedging
  : Using derivatives to protect against dollar volatility and political events
• Alternative Assets
  : Increasing allocations to gold and other hedges [5]
• Active Monitoring
  : Tracking public opinion trends and policy developments

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The disconnect between US geopolitical ambitions regarding Greenland and strong public opposition (75% of Americans) creates a

for US-Denmark related investments. This manifests through:

1. Direct divestment actions
   by European pension funds reducing US asset holdings
2. Elevated policy uncertainty
   driving up required returns on US investments
3. Deteriorating diplomatic relations
   creating treaty and regulatory risks
4. Dollar weakness
   as international investors reassess US asset attractiveness

The data shows this is not merely theoretical—major Danish and Scandinavian investors have already begun reducing US exposure, with the risk premium on US assets continuing to rise as geopolitical tensions mount [5]. This represents a tangible cost of pursuing geopolitical objectives that lack public support.

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[1] CNN - “75% of Americans oppose US attempting to take control of Greenland, CNN poll finds” (https://www.cnn.com/2026/01/15/politics/greenland-cnn-poll)

[2] Politico - “Most Americans oppose Trump’s push on Greenland, poll shows” (https://www.politico.com/news/2026/01/15/trump-greenland-poll-00731009)

[3] OSW Analysis - “US-Denmark-Greenland: current state of play and future scenarios” (https://www.osw.waw.pl/en/publikacje/analyses/2026-01-16/us-denmark-greenland-current-state-play-and-future-scenarios)

[4] Top1000Funds - “Danish investors shun the US but complete divestment ‘unlikely’” (https://www.top1000funds.com/2026/01/danish-investors-shun-the-us-but-complete-divestment-unlikely/)

[5] Reuters - “Big North European investors reassess US exposure as geopolitical risk mounts” (https://www.reuters.com/business/finance/big-north-european-investors-reassess-us-exposure-geopolitical-risk-mounts-2026-01-22/)

[6] Congress.gov - “Greenland, Denmark, and U.S. Relations” (https://www.congress.gov/crs-product/IN12643)