What do the world’s multiple crises mean for investors?
With the collapse of the Soviet Union in the early ’90s and the end of the Cold War, political scientist Francis Fukuyama famously declared that the end of this ideological conflict was “The end of history”. By this, he meant that liberal democracies and the free market had essentially won the contest with communism. Was it the end of history and are we in fact entering a new cold war?
This was the theme of a fascinating keynote presentation on geopolitics by Dr Alan Dupont AO, CEO and Founder of the Cognoscenti Group, at the recent Lonsec Symposium. SBP was intrigued to discover what we would learn and what insights we could impart to our clients in the financial services industries.
In front of a packed house of financial advisers and investment specialists, Dr Dupont outlined the state of the world at present: a polycrisis scenario that’s arguably created the most volatile, unpredictable and challenging investment environment since World War II.
“When you’re talking about systemic change, and long periods of volatility, it becomes very difficult to predict or anticipate what’s going to happen.”
Dr Alan Dupont: Geopolitics | The return of history and polycrisis
What will this mean for business and investors?
Dr Dupont noted that the ratio of executives concerned about geopolitical risk in Asia-Pacific has increased tenfold in just a couple of years. He made the following points about the implications for companies and investors.
- A more divided world poses a fundamental risk for companies that haven’t had to worry about geopolitics for over 30 years
- Countries are moving to trade with states they trust and with which they are strategically aligned – neutrality is becoming more difficult
- We can expect more government intervention in the market
- National security and foreign policy considerations will increasingly drive government economic and investment decisions
- Industries affected could include pharmaceuticals, critical minerals, armaments, AI, quantum computing and high-end computer chips