Navigating the Waves of Deglobalisation: Its Impact on Thematic Investing

In a world where geopolitical tension, supply chain disruptions, and concerns over energy security are increasingly becoming the norm, the globalised order of the last three decades is facing an unprecedented challenge. The evolving landscape of deglobalisation is set to profoundly impact various investment themes, with an emphasis on smart manufacturing, energy transition and climate change, and the circular economy.

Navigating the Waves of Deglobalisation: Its Impact on Thematic Investing

Riding the Tide of Manufacturing Reshoring

Over recent years, we’ve seen a significant shift in manufacturing trends. Manufacturers have been reshoring, or “near shoring”, their production processes to bring them closer to their home markets. A trend precipitated by a desire to ensure manufacturing independence, reduce reliance on foreign supplies and potentially disruptive global supply chains, especially in the wake of geopolitical tensions and the Covid-19 pandemic.

Leading the reshoring trend is the semiconductor industry. Amidst growing concerns about overdependence on China for high-end semiconductors, the US passed the Chips Act in 2022, allotting $52.7 billion for semiconductor R&D and manufacturing. Likewise, the Inflation Reduction Act mobilises $1.5 trillion into clean energy, including advanced manufacturing production credits. Europe has also followed suit, launching the Green Deal Industrial Plan with €390 billion in funding for strategic technologies such as solar and wind energy, heat pumps, and batteries.

Such initiatives are aimed not only at ensuring a secure supply of critical technologies but also at generating skilled jobs and maintaining competitiveness in a rapidly changing global landscape. They highlight the potential rewards for smart manufacturers, the pioneers of sustainable innovation in hardware, software, and new materials.

Moreover, as labour shortages begin to bite and wage rates rise, there is a compelling case for increasing automation in manufacturing processes, made even more attractive by advancements in artificial intelligence, robotics, and other innovations. Hence, manufacturers focusing on equipment such as robotics or sensors are likely to emerge as winners in this reshaping landscape.

Navigating the Waves of Deglobalisation: Its Impact on Thematic Investing

Necessity of Energy Security

Global warming and the ensuing need to transition from fossil fuels to renewable energy is a widely acknowledged issue. But the recent Russia-Ukraine conflict has amplified another vital reason – energy security. The volatile natural gas prices in the wake of the crisis have underscored the risks of relying on external energy supplies.

Countries can achieve energy self-sufficiency by investing in renewable sources like wind, solar, wave, and biomass power. This has triggered significant government stimulus in renewable energy, including the US’s IRA and EU’s GDIP.

While the Covid-19 pandemic has undoubtedly rattled the energy sector with disrupted supply chains, higher raw material costs, and logistical issues, the effects are predominantly short-term. The long-term structural shift towards renewable energy, catalysed by governmental efforts to enhance energy security, could benefit global operators in the energy transition space significantly.

The Circular Economy: Keeping it Local

The deglobalisation trend also aligns seamlessly with the circular economy theme. A circular economy aims to replace the linear “take-make-waste” model with one that keeps goods and materials in circulation for as long as possible. By designing products with efficiency, reusability, and recyclability in mind, we can drastically cut down on waste and pollution.

Adopting local supply chains in a circular economy can reduce dependence on distant suppliers, streamline logistics, and lower energy consumption. These changes are not only beneficial from an environmental perspective but also serve to enhance economic resilience in an era of increasing supply chain disruptions.

Concluding Remarks

In conclusion, while the challenges to globalisation undoubtedly bring a certain level of uncertainty, they also offer an opportunity for reimagining and reconfiguring investment strategies. Themes like smart manufacturing, energy transition, and the circular economy are particularly poised to benefit from this new environment. Investors who can adeptly navigate these changes will likely find substantial rewards amidst the challenges.

Author:Com21.com,This article is an original creation by Com21.com. If you wish to repost or share, please include an attribution to the source and provide a link to the original article.Post Link:https://www.com21.com/navigating-the-waves-of-deglobalisation-its-impact-on-thematic-investing.html

Like (1)
Previous July 28, 2023 3:27 pm
Next August 1, 2023 9:06 pm

Related Posts

  • Navigating 2024: 5 Top Investing Ideas for a Resilient Portfolio

    Introduction: As we step into 2024, the financial landscape appears to be shrouded in uncertainty. However, despite the potential challenges, strategic investors can find opportunities to not only weather the storm but potentially thrive. In this comprehensive guide, we’ll delve into five top investing ideas for 2024, crafted by Fidelity’s seasoned experts. Whether you’re seeking income, aiming for a balanced portfolio, or considering the impact of fees and taxes, these strategies are designed to help you get the most out of your investments. Don’t Miss These Income Opportunities: In a…

    December 23, 2023
    0
  • El Niño Phenomenon: Characteristics, Agricultural Impacts, and Investment Opportunities in Commodity Markets

    In the world of climatology, few phenomena have such broad and far-reaching impacts as El Niño. Just recently (June 8, 2023), the National Oceanic and Atmospheric Administration (NOAA) has announced the arrival of a new El Niño cycle, sparking interest from meteorologists, agriculturalists, and investors alike. Understanding El Niño, its unique features, its potential consequences for agriculture, and the historical trends it imposes on commodity prices can provide significant insights and opportunities for savvy investors. Understanding El Niño Definition: El Niño is a climatic phenomenon that involves a periodic warming…

    June 8, 2023
    0
  • Navigating 2024: 5 Potential Surprises That Could Impact Your Investments

    Introduction: As we embark on a new year, the economic and corporate landscapes appear robust, exceeding expectations set by many economists. However, despite the positive outlook, the financial markets are no stranger to surprises. In this comprehensive blog post, we’ll explore five potential surprises that could shape the investment landscape in 2024. From inflation dynamics to Federal Reserve policies, economic risks, productivity trends, and the performance of high-quality US large-cap companies, let’s delve into the intricacies that might unfold over the course of the year. Inflation: A Lingering Challenge While…

    January 25, 2024
    0
  • 2024 Stock Market Outlook: Navigating a Bull Market with Earnings Growth and Falling Rates

    Introduction: As we approach the end of 2023, the financial markets are experiencing a resurgence reminiscent of spring, with both stocks and bonds making robust gains. The prospect of the Federal Reserve concluding its prolonged rate-hiking campaign has injected confidence into investors, paving the way for a potential continuation of the bull market into 2024. While uncertainties always loom, the optimism surrounding a strong Santa rally and the possibility of rate cuts in the coming year paint a promising picture. In this in-depth analysis, we will explore the factors driving…

    December 23, 2023
    0
  • Navigating Investment Waters in the Age of Weaponized Migration

    Geopolitical Realities and Financial Markets Savvy investors understand that geopolitical tensions and uncertainties can have a profound impact on the financial markets. In this ever-changing landscape, one factor that is gaining prominence is weaponized migration. Recent events on both sides of the Atlantic, from the U.S.-Mexico border crisis to the situation in the Mediterranean, have raised questions about the motivations and implications of this global immigration surge. Weaponized Migration: A Historical Perspective The use of migrants as pawns in geopolitical games is not a new phenomenon. This strategy has been…

    October 13, 2023
    0
  • 5 Reasons Why Treasury Bond ETF TLT is Your Safest Bet in 2023’s Financial Storm

    In the rapidly evolving world of finance, change is the only constant. As we journey into the second half of 2023, the landscape is shifting more dramatically than ever. Amidst a rising tide of financial instability and a chorus of dissent against leading global financial institutions, one investment avenue shines as a beacon of relative safety: the Treasury Bond ETF (TLT). This article will explore five compelling reasons why TLT might be your most prudent bet in navigating 2023’s financial maelstrom. Global Financial Systems on Shaky Grounds We live in…

    July 3, 2023
    0
  • Demystifying Value Investing: Navigating Bargains in the Financial Seas

    In the vast ocean of investment strategies, value investing has long been an anchor for those looking to buy stocks at prices believed to be below their intrinsic value. But what exactly is value investing, and how can investors harness its principles to make informed decisions in the stock market? Let’s dive deep. The Essence of Value Investing Metric Objective Price-to-book Identify Undervalued Stocks Forward price-to-earnings Find undervalued stocks with strong earnings on a forward-looking basis Enterprise value to cash flow from operations Evaluate stocks using a holistic company view…

    August 18, 2023
    0
  • Revolutionizing Automated Investing: An In-Depth Look at M1 Finance, the Top App for Portfolio Management

    Have you ever wanted to get into investing, but felt overwhelmed by the complexity of choosing stocks, bonds, and other investment options? Look no further than M1 Finance, a revolutionary automated investing app that makes portfolio management easier than ever. Read on to find out how M1 Finance can help you make smart investments with minimal effort! Introduction to M1 Finance M1 Finance (m1.com)is a powerful, intuitive, and easy-to-use app designed to automate the investment process for individuals. It is one of the most popular investment platforms that has been…

    February 26, 2023
    0
  • Comparative Analysis of ETFs: iShares 20+ Year Treasury Bond Buywrite Strategy ETF (TLTW) vs. iShares 20+ Year Treasury Bond ETF (TLT)

    TLTW – iShares 20+ Year Treasury Bond Buywrite Strategy ETF Net Assets: 254.29M USD Year-to-Date (YTD) Daily Total Return: 9.75% Yield: Not Available Annual Report Expense Ratio (net): 0.35% NAV (Net Asset Value) as of Jun 16, 2023: $33.22 NAV Total Return as of Jun 15, 2023 YTD: 9.97% This ETF seeks to track the investment results of an index that reflects a strategy of holding the iShares 20+ Year Treasury Bond ETF while writing (selling) one-month covered call options to generate income. It is suggested that it may provide…

    June 17, 2023
    1
  • Automating Your Savings and Investments: The Low-Lift Strategy for High Returns

    Introduction In a world filled with countless daily demands, the idea of having one less thing to think about is truly appealing. Just as inventions like the dishwasher and washing machine revolutionized household chores, automating your saving and investing can revolutionize your financial life, offering you both convenience and potentially significant impacts on your long-term net worth. This blog post delves into the concept of automated investing, highlighting its many benefits and providing insights into how to make it work for you. What is Automated Investing? Automated investing is a…

    October 12, 2023
    0

Leave a Reply

Your email address will not be published. Required fields are marked *