The news is teeming with crisis headlines every day: the war in the Middle East, tensions between the US and China, threats of punitive tariffs, debt or government crises, rising competitive pressure from China, and even the football World Cup has been accused of being influenced by political forces. The topics change, but the sense of uncertainty remains. The world appears to be in transition, and because of the complexity and interconnectedness of these developments, it is becoming increasingly difficult to assess them. This often also affects investment decisions.
An effective strategy for investors is not to attach too much importance to such headlines, in our view. However, those who still wish to engage with these topics would be well advised to do so systematically. The World Economic Forum’s annual “Global Risks Report” is one of many sources of this type of analysis, assessing the relevance of developments, looking for causes, and highlighting interdependencies. This could enable investors not only to better assess risks, but also to recognize the opportunities that arise from them.
Fundamentally, the point is that the world order is indeed changing, and the causes are varied. The WEF distinguishes between geopolitical, economic, societal, technological, and environmental drivers.
This diversity is unlikely to change much in the coming years. Issues such as the targeted use of tariffs, sanctions, export controls or subsidies, geopolitical confrontation, armed conflicts, deliberate misinformation, and increasing social polarization will likely continue to be front of mind for investors in the years ahead. Extreme weather events such as floods, heatwaves, or storms are also likely to be on that list, with potentially negative consequences for people, infrastructure, and the economy. Technology and innovation also play a decisive role. Developments in artificial intelligence and various other key technologies, such as quantum computing and the race for dominance in space, will create new leaders and laggards, which will have implications for countries, sectors, and individual companies.
The roots of this change are not only diverse; they are also interconnected. A war or sanctions are often only the proverbial tip of the iceberg. Behind it lie deeper, often complex and long-term developments that are favored and reinforced by shifts in power and multilateralism. On the one hand, the world is moving away from a clear, US-dominated order toward a multipolar, fragmented structure. This allows regional actors to set new rules, while the once-established standards for cooperation and trade may also change. This comes alongside the declining effectiveness of international institutions, which can make it harder to find common solutions to global issues such as climate, debt, or security. At the same time, growing inequality is intensifying social tensions, weakening trust in politics and institutions, and increasing vulnerability to populism and polarization. Added to this is the potential influence of artificial intelligence, cyber risks, and new technologies on labor markets, information flows, and security structures.
China’s rapid rise to global power status has also changed the world order. Particularly economically, China is putting many other countries under pressure, as it has already gone from challenger to setting the standard in many sectors. In terms of research, patents, AI, cleantech, defense, and space, it has in some cases caught up with, or even overtaken, the US. Europe—which is Switzerland’s most important trading partner—is now lagging behind in many areas and is likely to fall further back in the years ahead. The Belfer Center in Massachusetts publishes an annual index that measures the competitive position of 25 countries across five key technologies: AI, biotechnology, semiconductors, quantum computing, and space. The US still leads this ranking with 84 points, but China is already in second place with 65 points, well ahead of Europe and Japan, which rank third and fourth with 42 and 24 points, respectively.
Our conclusion: The world (dis)order is changing, driven by a wide range of causes that often depend on one another. It is understandable that, given this diversity and complexity, investors’ risk appetite and capacity may suffer. At the same time, however, these changes are also creating new areas of growth that can turn risks into opportunities. Investors are therefore well advised to understand not only the what of a crisis, but also the why. We believe those who systematically engage with the links between geopolitics, the economy, society, technology, and the environment are likely to be more willing to position their portfolios in such a way that risks can be mitigated, while also taking into account the potential offered by structural opportunities.
