The changing world order and what it means for investors

Hi and welcome.

I'm Alan Pullen, Portfolio Manager for the Global Opportunities Fund.

And today we're joined by Michael Allen, our geopolitical expert based in Washington.

Of course, there is a lot happening around the world at the moment.

Geopolitics impacting markets perhaps as much as any time in history at the moment.

So it's a great time to get an update from Michael Allen.

Welcome to the show, Michael.

Thanks so much for having me.

Okay, so there is a lot happening out there, but let's start with a broader question.

What is the most underappreciated geopolitical shift investors are treating as cyclical, but you actually think is a structural change?

well i think it's that the nature of warfare is changing so much that any number of new as i call them conflagrations or hostilities could erupt at any particular time just when i think israel thought that they had hezbollah in a place that they could deal with them consistently they started using the same types of drones in the same types of ways that are being used in Russia, Ukraine.

And at the same time, we're learning of all the different ways Taiwan and China might use some of these very similar technologies in a future conflict in particular.

And we've, of course, had this throughout history.

But even before we get to artificial intelligence, The widespread ubiquity of new and exciting technology, how it can be used for good and for ill to me is one of these things that we all need to study more closely and figure out a way that it might govern our decisions in business and elsewhere.

What are the implications for that in terms of great power politics? And are we moving from this globalisation regime to something different going forward?

Yeah, I do think we call it here at my firm, Beacon, we call it a deglobalization.

The period through which everything seemed to be moving towards something more cohesive seems to be over.

I mean, it's been many years now since we've successfully negotiated a World Trade Organization round.

Of course, you've seen all sorts of problems with Brexit in Europe.

You've seen the failure or really the failure to launch of the idea of the Obama era trade agreement, the Trans-Pacific Partnership.

So I think what you're seeing is all the forces that used to be unifying are now more centrifugal.

And when that is happening, when we're not coming together in sort of a globalization way, we start resorting to export controls or more industrial policy or more blacklisting and sanctioning of different entities around the globe.

So I definitely think that when you also consider the widespread propagation of all sorts of new technology, we're in reverse, as we would say, and not on the same path that I think characterized the globalization and those trends that we used to think and write about so often.

Look, that's so important from a portfolio point of view, given so many of our companies have been built on globalisation and have massive international exposures.

So being aware of these shifts in geopolitics and what it could mean for individual companies, what it could mean for industries is obviously important when we're thinking about investing over the long term.