Following a 30-year post-Cold War period when the United States was the only global superpower, we are today confronted with an emerging multipolar world. Replacing relative global peace and stability is a period of greater geopolitical instability and conflict. In addition, 2024 is a year of heightened geopolitical tensions and pivotal legislative elections, most notably the November US Presidential Election. Tariff war risk involving the US, Europe and China also looms large.
We see three key reasons for this shift towards a multipolar world: disruptions in supply chains following the pandemic, the Ukrainian conflict, and intensifying tensions between Western countries and China.
Several sources of opportunities emerge from this context. A first one will be the security of strategic resources such as raw materials, energy and food. A second dimension is related to re-shoring and new partnerships to secure supply chains. The latter will necessitate automation and robotisation given the scarcity of qualified workers and costs related to local production in industrialised economies. The use of artificial intelligence will also play a key role.
Our recommendations
A cross-asset theme focusing on equities, bonds and commodities.
E.g. gold, precious metals.
Based on stock and credit markets to minimise downside risk.
Cybersecurity and semiconductor supply, and the supply of essential transition metals such as copper.
Focusing on equity and credit long/short strategies and merger arbitrage strategies.
Key risks
An unexpected rise in inflation, leading central banks to review their monetary policy outlook.
The evolution of energy and raw material prices which vary considerably depending on economic growth, but also geopolitical events that are often unpredictable and uncontrollable.
