- Geopolitical Strategist
Switzerland, Institutional
ChangeThe views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
This is an excerpt from our 2023 Investment Outlook, in which specialists from across our investment platform share insights on the economic and market forces that we expect to influence portfolios in the year to come. This is a chapter in the Global Economic Outlook section.
Geopolitical turmoil and global policy shifts have been two of the most defining macroeconomic characteristics of 2022. Structural and interlocking global challenges represent a significant departure from previous, more benign geopolitical and macro environments. We explore themes that prudent investors may do well to watch in the new year and beyond and outline how these changes could offer opportunities for discerning investors.
Five themes to focus on in 2023 and beyond
To determine the global investment risks and opportunities that lie ahead, we will be keeping an eye on several interconnected macroeconomic themes, including:
- Deglobalization: The COVID-19 pandemic gave way to an ongoing wave of supply-chain disruptions that fractured IT infrastructure. This, in turn, raised questions around national security, pushing policymakers toward deglobalization policies, a trend that could accelerate in the future. Sectors and industries likely to be impacted include:
- Semiconductors
- Biotechnology
- Renewable technologies
- Critical minerals
- Artificial intelligence
- Space-related technologies
- Advanced manufacturing
- Next-generation communications
- Robotics
- Other civilian and military sectors
- Some financials
- Inflation and higher interest rates: In the wake of the pandemic, the global economy is experiencing structurally higher inflation, which global central banks are trying to tamp down with higher interest rates. The net effect of this is slower global growth, which has knock-on effects for the future.
- Higher great-power conflict risk: Tensions are high among many great global powers. This implies heightened military risk, higher cybersecurity risks, and deepening policy risks.
- Increasing militarization of the Indo-Pacific and Europe: These regions have exhibited higher defense spending amid a stepped-up multilateral defense alliance and other institutional responses. We expect global competition to intensify.
- Political events: Deepening policy rifts in many nations can incite both domestic political friction and global dysfunction. We’ll be closely watching the impacts of various global political events, such as China’s 20th National Party Conference, the US midterm elections, upcoming European elections, and 2024 presidential elections in both the US and Taiwan.
How do these trends influence our investment outlook?
We believe that the shifting geopolitical and policy environment will be disruptive for a long time. Against this backdrop, companies are likely to become more differentiated from one another, which could present compelling investment opportunities. This environment also lends itself to thematic strengths across regional, country, industry, company, asset, and asset-class lines, particularly for active managers that are well equipped to identify the could-be thematic winners.
The bottom line is that we believe there are both risks and opportunities associated with global geopolitical and policy changes. For actively managed investment strategies, some of these shifts could offer marked structural advantages for years to come.
Experts
READ NEXT
Article 3
Related Insights
Showing
of
Insights Posts
Decoding the effects of deglobalization
Nicholas Petrucelli outlines the economic, political, and geopolitical underpinnings of deglobalization. He also demonstrates the impact this trend has today and analyzes the investment implications.
Quick Take
2024-03-31
Russia/Ukraine: One year in with no end in sight
Geopolitical Strategist Thomas Mucha analyzes the impacts of the Russia/Ukraine conflict one year in and identifies potential longer-term effects.
Quick Take
2024-02-29
Fintech regulation: Geopolitics, ESG, and crypto
Discover how fintech’s growing role as a national strategic imperative impacts regulations, the effect of ESG on regulation, and the specific need for regulation in crypto markets.
Article
2024-02-29
Debt and dysfunction in Washington: The US hits the ceiling (again)
Global Investment Strategist Nanette Abuhoff Jacobson talks to Macro Strategist Mike Medeiros about the US debt-ceiling showdown and considers its potential investment implications.
Quick Take
2024-02-29
Why investing in themes for EM equities may reap rewards
Portfolio Manager Dáire Dunne outlines why he is increasingly optimistic about the potential opportunities within select EM equity themes this year.
Article
2024-02-29
How to invest amidst a still unfolding energy crisis?
In this ActiveViews webcast, senior climate – and energy – focused professionals explore the still unfolding energy crisis in Europe and the associated challenges and opportunities for investors.
Event replay
2024-02-29
China internet: Identifying opportunities amid economic reopening
China’s re-opening and economic recovery from its zero-COVID policy has bolstered our optimism in Chinese internet companies.
Article
2023-12-31
Picture this: Our 2023 economic forecast in five charts
We explain the shifts the market is undergoing, analyze the implications for different asset classes, and identify potential risks and opportunities in a series of visuals.
2023-12-31
Navigating the new global economy in 2023
This executive summary distills the points of view of several of our 2023 Outlook authors. Discover the risks and opportunities they see as we enter a new economic and market regime.
Article
2023-12-31
China equity in 2023: Year of the stock picker
Despite the potential risks of investing in China equity, Equity Portfolio Manager Bo Meunier believes there are attractive opportunities for patient, discerning stock pickers.
Article
2023-12-31
Semiconductor industry faces near-term headwinds, long-term growth
Global Industry Analyst Eunhak Bae analyzes short-term headwinds and long-term opportunities in the semiconductor industry.
Article
2023-12-31
URL References
Related Insights