The trend towards globalisation follows classic microeconomic theory. Firms wish to maximise revenues and minimise costs and create an inelastic demand curve for a product for which they are the sole supplier. And whilst many firms have not reached this optimal existence, the journey there has embraced globalisation. But 3 things have changed:
1. The era of free money that globalised the flow of capital has taken a turn. Banks answer to capital markets. Rates are rising, and credit ratings are being scrutinised ahead a pending recession.
2. Unfavourable demographics in developed countries, and the restricted migration of labour across borders is leaving job vacancies unfilled.
3. And the production and distribution of both inputs and final goods are backlogged and stuck in ports of cities still recovering from COVID-induced lockdowns.Globalisation is failing. Geopolitical risks are rising. And products are no longer being produced and delivered Just-In-Time.
Governments and corporations are therefore re-imagining their supply chains in a deglobalised world. And institutional investors, whose equity portfolios and performance are highly leveraged to globalisation, are worried about the solution.
How can supply chains be dismantled and solved against the current backdrop of global country and company interdependence? Does deglobalisation only bring disadvantages - Higher costs and a worsening experience for consumers.
Or are there advantages and opportunities to be uncovered across the global equity universe? And if so, where?
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