Indeed, in the world of institutional investing, geopolitical risk emerged as a pressing concern. /Andrew Rozanov, OMFIF, 15 July 2021/
The former rules for investors, including central banks and pension funds, are no longer enough to make the right decisions for their portfolios. The three golden rules - global diversification, preference for less liquid assets in private markets and a very long investment horizon- need to be supplemented with the assessment of geopolitical risks.
Nevertheless, some ideas might be used to make life easier.
A new G2 world is emerging due to the US-China tensions, meaning that two increasingly separated world economies will offer investment opportunities.
There is a short but safe list of successful nations where nearly everything will be eligible for long-term investments.
The main avenues for technological breakthroughs are visible, meaning that nearly all investments in these areas and in the successful economies will be promising.
Finally, none of the new elements of the money revolution will be long-lasting that are against the will of governments and central banks. The old/new center of gravity, the power of nation states will prevail over unwanted money market innovations. Do not bet against power centers.
Governor Matolcsy, MNB, the Central Bank of Hungary