{"id":827842,"date":"2025-06-13T12:45:49","date_gmt":"2025-06-13T10:45:49","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=827842"},"modified":"2025-06-13T14:03:16","modified_gmt":"2025-06-13T12:03:16","slug":"multipolarity-shaping-the-investment-landscape-for-decades-to-come","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/industry-news\/827842\/multipolarity-shaping-the-investment-landscape-for-decades-to-come\/","title":{"rendered":"Multipolarity: Shaping the investment landscape for decades to come"},"content":{"rendered":"\n<p><em>John Orford, Portfolio Manager<\/em><\/p>\n\n\n\n<p>As Donald Trump&#8217;s second term seemingly marks a radical break with the past, the world order shift that his administration has highlighted has become a key investment theme that will shape the global economy and financial markets for decades to come. <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><a href=\"https:\/\/www.oldmutualinvest.com\/institutional\/invest-with-excellence\/global-managed-alpha-fund\/?utm_source=BusinessTech&amp;utm_medium=Article&amp;utm_term=June+2025\" target=\"_blank\" rel=\"noreferrer noopener\">Click here to learn more the Old Mutual Global Managed Alpha Fund.<\/a><\/strong><\/li>\n<\/ul>\n\n\n\n<p>Investors should expect a more fragmented world where national strategic interests dominate. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">A new multipolar world order<\/h2>\n\n\n\n<p>After World War II, the United States was the dominant global economy, as Europe, Russia and Japan\u2019s economies had been devastated by two world wars. <\/p>\n\n\n\n<p>While the Soviet Union provided a military challenge to the US, it never seriously challenged the US\u2019s dominant economic role. <\/p>\n\n\n\n<p>Its collapse in 1991 left the US alone in dominating the global order \u2013 a global order it shaped as it wished, exporting liberal democracy and free market capitalism. <\/p>\n\n\n\n<p>With China\u2019s accession to the World Trade Organisation (WTO) formalised in 2001, the triumph of the US world order appeared complete. <\/p>\n\n\n\n<p>Ironically, however, China\u2019s entry into the global economy marked the beginning of the end of US dominance.<\/p>\n\n\n\n<p>Importantly, China has not only grown in size but has also come to pose an ever-growing military and technological threat to the US. <\/p>\n\n\n\n<p>If the post-WWII world was one in which the US largely dominated, shaping the global political economy through organisations like the WTO, World Bank and International Monetary Fund (IMF), the new world order is one marked by a rising challenger in the form of China and a number of regional powers ranging from the European Union (EU) and Russia to emerging giants like Brazil, India and Indonesia. <\/p>\n\n\n\n<p>This is a far more fragmented world, in which the US is in retreat from global affairs, while China and other regional powerhouses are increasingly asserting their influence. <\/p>\n\n\n\n<p><strong><em>CHART 3: The changing make-up of the global economy (1950 \u2013 2030)<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-26.png\"><img loading=\"lazy\" decoding=\"async\" width=\"902\" height=\"453\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-26.png\" alt=\"\" class=\"wp-image-827853\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-26.png 902w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-26-300x151.png 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-26-768x386.png 768w\" sizes=\"auto, (max-width: 902px) 100vw, 902px\" \/><\/a><figcaption class=\"wp-element-caption\">Source: Bolt and van Zanden &#8211; Maddison Project Database 2023 sourced from OurWorldinData.org; IMF World Economic Outlook. Old Mutual Investment Group.<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">The retreat of globalisation<\/h2>\n\n\n\n<p>A defining feature of the unipolar world in the post-WWII era was globalisation. <\/p>\n\n\n\n<p>However, since the 2008 Global Financial Crisis, globalisation has been in retreat. <\/p>\n\n\n\n<p>The Covid pandemic laid bare the vulnerability of global supply chains to disruption, serving as an imperative to rebuilding national self-sufficiency in key sectors, from healthcare to chip production. <\/p>\n\n\n\n<p>Trade tariffs, restrictions on foreign investment and national industrial policies, including subsidies, will increasingly shape the global economy. <\/p>\n\n\n\n<p>In this sense, Trump\u2019s agenda is nothing new or indeed unique to the US. Trump is using tariffs to force both friend and foe to align with the US\u2019s strategic interests. <\/p>\n\n\n\n<p>At the same time, China is asserting its influence through strategic initiatives like the One Belt One Road programme, which drives regional infrastructure while binding participants to Beijing\u2019s priorities. <\/p>\n\n\n\n<p>The cost to the world is likely to be less efficient production, higher prices and slower global growth. <\/p>\n\n\n\n<p><strong><em>CHART 4: THE RETREAT OF GLOBALISATION (1820 \u2013 2025)<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-27.png\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"554\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-27-1024x554.png\" alt=\"\" class=\"wp-image-827854\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-27-1024x554.png 1024w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-27-300x162.png 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-27-768x416.png 768w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-27.png 1033w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><figcaption class=\"wp-element-caption\">Source: Trade to GDP data is from various sources published in OurWorldinData, Tariff data is from the Tax Foundation based on data from US Census Bureau; US International Trade Commission. Data for 2025 is base estimates by the Tax Foundation assuming the threatened tariffs on China, Mexico and Canada are implemented.<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">The end of the peace dividend<\/h2>\n\n\n\n<p>A benefit of the post-WWII era, particularly after the decline of the Soviet Union, was the US\u2019s ability to police the world. <\/p>\n\n\n\n<p>The result was a significant decline in military spending as a share of GDP. <\/p>\n\n\n\n<p>In the US, military spending fell from 9% of GDP in 1960 to less than 4% by 2023, while total global military spending fell from 6% of GDP in 1960 to 2% in 2023. This trend is now reversing. <\/p>\n\n\n\n<p>A multipolar world is likely to be more prone to conflict and regional powers will assert their influence, in part, through military power. <\/p>\n\n\n\n<p>The higher share of GDP allocated to military spending requires a reduction elsewhere and, to the extent that it is financed by government borrowing, adds to the risk premium investors are likely to demand for holding long-term government bonds. <\/p>\n\n\n\n<p><strong><em>CHART 5: END OF THE PEACE DIVIDEND \u2013 MILITARY SPENDING SET TO RISE (to end 2023)<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-28.png\"><img loading=\"lazy\" decoding=\"async\" width=\"848\" height=\"518\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-28.png\" alt=\"\" class=\"wp-image-827855\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-28.png 848w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-28-300x183.png 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-28-768x469.png 768w\" sizes=\"auto, (max-width: 848px) 100vw, 848px\" \/><\/a><figcaption class=\"wp-element-caption\">Source: Stockholm International Peace Research Institute, Military Expenditure Database.<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Higher prices as countries pursue national interests<\/h2>\n\n\n\n<p>The retreat from globalisation and greater spending on military and defence are both likely to be inflationary. <\/p>\n\n\n\n<p>In a multipolar world, regional powers will focus on national strategic interests. <\/p>\n\n\n\n<p>A good example is the global semi-conductor industry. <\/p>\n\n\n\n<p>Whether under Biden or Trump, the US government is prioritising building national security in chip supply, vital to the modern technology-driven economy across virtually all sectors, as well as to modern military capability. <\/p>\n\n\n\n<p>The Covid pandemic demonstrated the vulnerability of global \u2018just-in-time\u2019 supply chains and now governments are focused on building national resilience, even if it comes at the expense of higher costs of production. <\/p>\n\n\n\n<p>For instance, TSMC, estimates that producing 4nm chips at its Arizona plant is about one third more expensive than producing them at its plants in Taiwan. <\/p>\n\n\n\n<p>Strategic minerals is another key area where national strategic interests will drive increased competition and higher costs. <\/p>\n\n\n\n<p>Minerals like cobalt, copper, lithium, nickel and rare earth metals are vital to the transition to clean energy. <\/p>\n\n\n\n<p>As the world attempts to decarbonise, demand for these and other minerals will continue to rise. <\/p>\n\n\n\n<p>However, reserves and processing capacity are not evenly distributed globally and access to these minerals will be a key source of global conflict. <\/p>\n\n\n\n<p>It also means national efforts to secure or control the supply of these minerals will likely drive prices higher. <\/p>\n\n\n\n<p>Deglobalisation, through fragmentation of global supply chains, increased competition over scarce resources such as chips and critical minerals, and increased military spending, are all likely to encourage a greater role of government in the economy and drive inflation. <\/p>\n\n\n\n<p>Unfortunately, this coincides with a reversal in another major deflationary force. <\/p>\n\n\n\n<p>Since the 1970s, the fall in the dependency ratio (the ratio of non-working-aged population to the working-aged population) has been a significant factor driving lower inflation in the global economy. <\/p>\n\n\n\n<p>However, dependency ratios are rising globally, including in China. <\/p>\n\n\n\n<p>The combination of deteriorating demographics and the retreat in globalisation means the odds are tilted towards higher medium-term inflation. <\/p>\n\n\n\n<p>While inflation is likely to moderate from the still elevated post-Covid levels, our base case is that inflation in developed economies is unlikely to settle back at the sub-2% levels that prevailed before Covid. <\/p>\n\n\n\n<p><strong><em>CHART 6: EXPECT HIGHER AVERAGE INFLATION OECD inflation (1956 \u2013 2035)<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-29.png\"><img loading=\"lazy\" decoding=\"async\" width=\"898\" height=\"440\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-29.png\" alt=\"\" class=\"wp-image-827857\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-29.png 898w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-29-300x147.png 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-29-768x376.png 768w\" sizes=\"auto, (max-width: 898px) 100vw, 898px\" \/><\/a><figcaption class=\"wp-element-caption\">Source: Factset, Old Mutual Investment Group<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">The beginning of the end of the US dollar?<\/h2>\n\n\n\n<p>While Trump is aggressively attempting to coral the world to his purpose, another possible outcome of Trump\u2019s second term might well be an increase in foreign distrust of the US and its institutions. <\/p>\n\n\n\n<p>It is noticeable that central banks\u2019 holdings of gold have spiked since Russia\u2019s foreign currency reserves were frozen by Western powers following its invasion of Ukraine. <\/p>\n\n\n\n<p>Over the longer term, the share of global central bank foreign currency reserves held in US dollars also appears to be gradually declining. <\/p>\n\n\n\n<p>Any erosion of trust in the US under Trump\u2019s administration is likely to see these trends accelerate, undermining the role of the US dollar as a reserve currency and supporting the fundamental case for holding gold. <\/p>\n\n\n\n<p><strong><em>CHART 7: CHALLENGING THE US DOLLARS STATUS Central Bank Reserves (1995 \u2013 2024)<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-30.png\"><img loading=\"lazy\" decoding=\"async\" width=\"921\" height=\"445\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-30.png\" alt=\"\" class=\"wp-image-827859\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-30.png 921w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-30-300x145.png 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/image-30-768x371.png 768w\" sizes=\"auto, (max-width: 921px) 100vw, 921px\" \/><\/a><figcaption class=\"wp-element-caption\">Source: Factset; Old Mutual Investment Group<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">What does this mean for investors?<\/h2>\n\n\n\n<p>The shift to a multipolar world holds important consequences for investors, who can expect a world less globalised and more prone to conflict, with a growing state role in the economy. <\/p>\n\n\n\n<p>One clear consequence for investors is the significant inflationary pressures of this new world, as regional powers emphasise national strategic interests and self-sufficiency. <\/p>\n\n\n\n<p>And as the US\u2019s power ebbs and the US dollar\u2019s importance as a reserve currency declines. <\/p>\n\n\n\n<p>building robust and diversified multi-asset portfolios is more important than ever to achieving long-term investment goals. <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><a href=\"https:\/\/www.oldmutualinvest.com\/institutional\/invest-with-excellence\/global-managed-alpha-fund\/?utm_source=BusinessTech&amp;utm_medium=Article&amp;utm_term=June+2025\" target=\"_blank\" rel=\"noreferrer noopener\">Click here to learn more the Old Mutual Global Managed Alpha Fund.<\/a><\/strong><\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/Old-Mutual-Headline-Image-John-Orford-1200x675-2.png\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/Old-Mutual-Headline-Image-John-Orford-1200x675-2-1024x576.png\" alt=\"\" class=\"wp-image-828050\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/Old-Mutual-Headline-Image-John-Orford-1200x675-2-1024x576.png 1024w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/Old-Mutual-Headline-Image-John-Orford-1200x675-2-300x169.png 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/Old-Mutual-Headline-Image-John-Orford-1200x675-2-768x432.png 768w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/Old-Mutual-Headline-Image-John-Orford-1200x675-2.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>A dramatic shift in global dynamics is reshaping economic and financial landscapes, setting the stage for profound, long-term change.<\/p>\n","protected":false},"author":57,"featured_media":827866,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10459],"tags":[22847,6011,5974],"class_list":["post-827842","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry-news","tag-global-funds","tag-globalisation","tag-old-mutual-investment-group"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/827842","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/57"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=827842"}],"version-history":[{"count":9,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/827842\/revisions"}],"predecessor-version":[{"id":828196,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/827842\/revisions\/828196"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/827866"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=827842"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=827842"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=827842"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}