On the financial side, a combination of geopolitical and economic factors is also increasing investor uncertainty and diminished confidence in US dollar assets. As a consequence, a vigorous search for safe havens is causing big shifts in portfolio capital flows with major impacts on the US dollar, gold and other asset prices.
Economic growth and asset valuations are driven by capital flows, which have been reshaped by the seismic shifts of the past year. The global political order has been upended, prompting countries and companies to reduce risk. As a result, supply chains are being reconfigured and new trade alliances formed, with implications for capital allocation.
Similarly, the excitement over new technologies is stimulating new investment flows — with these flows likely to broaden out beyond AI into other sectors such as biomedical sciences. Shifting views of the energy transition are also contributing to new patterns of capital allocation.
