New report analyzes the trends of investing in an interconnected world
Wells Fargo Investment Institute (WFII) today released a new thematic report, "The Future of Globalization – Investing in an Interconnected World." Over the next decade, WFII expects that innovative technologies will continue to forge even greater global connectedness, but that new investment opportunities will emerge with the changing composition of trade and its destinations. The report addresses the nature of globalization, the evolution of trade in consumer goods and services, increased information and innovation, the demographic impact on trade, and emerging risks and subsidiary trends. The report also outlines ways in which geopolitical tensions and protectionist trade policies will influence the mix between domestic and international portfolio allocations.
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(Graphic: Wells Fargo)
"The familiar pattern of extended supply chains fragmented across multiple low-wage production centers appears to be evolving towards more concentrated, high-tech, and regional trade," said Paul Christopher, head of Global Market Strategy for WFII. "We believe the reshaping of global trade will present broader and persistent opportunities in traded services and new technologies, but that supply chains will be shorter and focused around Asia and the U.S."
The report addresses key questions for investors to consider:
- How may globalization evolve and create opportunities for investors?
- Which economic and geopolitical forces may shape future globalization?
- How may technological innovation help drive these trends?
- What risks may impede globalization and which investments may benefit?
The report also outlines three international trends that can help investors as they prepare to reposition their portfolios over the next decade:
- Globalization favors the U.S. and parts of developing Asia over other regions of the world
- Certain sectors should benefit from expanding automation and services trade
- Centrifugal forces will remain, but investors have potential hedges
WFII strategists favor a larger exposure to the U.S. than international markets and international exposure that favors emerging markets across China, India, and Southeast Asia.
Download the report "The Future of Globalization," and read "The Big Rethink: Globalization in the Age of the Coronavirus" on Wells Fargo Stories.
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