THE END OF SOVEREIGNTY?

Globalization, nationalism and the 5 key investment implications for institutional investors

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WATCH THE VIDEO SERIES

Never before in history have people, information and capital moved across borders at the speed, frequency and volume we see today.

This video series, accompanies our latest megatrend white paper, The End of Sovereignty? Here, PGIM’s investment experts and thought leaders voice their insights on the escalating tussle between globalization and nationalism, the consequent implications for global financial markets, and how long-term investors may best position themselves to navigate these uncertain times.

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Globalization at the Speed of Light

In this video, Taimur Hyat, Chief Strategy Officer discusses why the continued power of globalization will profoundly affect investment outcomes, creating a unique set of challenges and opportunities for long-term investors.

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Key Investment Implications

The tussle between globalization and nationalism could have significant implications for global markets and the investment landscape. In this video, Hyat discusses five profound implications to help long term institutional investors rethink their investment approach.

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Global Macroeconomic Implications

The escalating tussle between the world’s two largest economies could have profound implications on global financial markets. In this video, Nathan Sheets, Chief Economist at PGIM Fixed Income, examines three potential scenarios of the intensifying trade dispute between the US and China.

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Threats to Sovereign Control

Sovereign nations are increasingly met by forces beyond their borders. As such, many of today’s key political questions arise from how nations will deal with these challenges. Here, Arvind Rajan, Head of Global and Macro, PGIM Fixed Income, expands on the threats to sovereign control and the key considerations for investors.

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Implications for Global Fixed Income

Investors must evaluate the impact of geopolitical events such as the trade tensions between the US and China, Brexit, and the rise of populism in Europe. In this video, Arvind Rajan, looks at how today’s complex market environment could create rich sources of Alpha for investors.

2 POWERFUL TRENDS RESHAPING THE GEOPOLITICAL LANDSCAPE

 

Rumors of the demise of globalization are greatly exaggerated. 

Cross-border flows of financial, human and digital capital are reaching high water marks—with new technologies further accelerating the pace of global change. 

 

of the top 100 global “economies” are now multinationals1

of the revenues of firms in the S&P 500 and the MSCI Europe Index are sourced from outside their home markets2

Cross border investment stocks have risen from below 20% of GDP in 1835 to 30% in 1950 to approximately 400% of GDP today3

The average cost of cybercrime for large firms has increased over 60% in the last 5 years4

A populist backlash against globalization has taken hold in developed markets—at times focused on free trade and at times on immigration.

The momentum behind global integration and the “borderless” challenges this has created is seen as a threat to state sovereignty – and now, nation-states are taking a variety of actions to wrest back control.

3 POTENTIAL RESPONSES TO MONITOR

  • A populist backlash in developed markets potentially threatens the agreements global trade is built on
  • Crackdown on cyberspace and the media
  • “Carrots and sticks” approach to encourage the return of the “local” multinational 

DISCOVER 5 KEY INVESTMENT CONSIDERATIONS

The escalating tussle between globalization and nationalism could have significant implications for global markets. As a result, institutional investors may want to consider rethinking their investment approach across 5 primary areas.

 Download the whitepaper to get the full perspective

  1. “Countries vs corporations data set”, Global Justice Now, September 2016. <http://www.globaljustice.org.uk/resources/countries-vs-corporationsdata-set>; size of economies is measured by revenue.
  2. Gupta, Abhishek and Subramanian, Madhu, “Economic Exposure in Global Investing: Tilting Portfolios Based on Macroeconomic Views”, MSCI, October 2014; Silverblatt, Howard, “S&P 500 2016: Global Sales”, S&P Down Jones Indices, July 2017; S&P data. 
  3. “Understanding Globalisation”, Bank for International Settlements, June 2017. 
  4. "2017 Cost of Cybercrime Study: Insights on the Security Investments That Make a Difference”, Ponemon Institute and Accenture, 2017. <https:// www.accenture.com/t20170926T072837Z__w__/us-en/_acnmedia/PDF-61/Accenture-2017-CostCyberCrimeStudy.pdf>; Large firms defined as having over 1,050 employees.