Recent commentary from global leaders at Davos has reignited debate about whether the international rules-based order is breaking down.
At Searing Point Wealth Management, our view is more measured.
The world has not suddenly changed. Rather, political leaders are now openly acknowledging realities that have been evident for over a decade. Namely, that global power is increasingly exercised through influence, leverage, and selective rule-following.
For investors, this matters but it does not require alarm.
From rules to realism
Majo powers have long acted pragmatically when it suited them. What has changed is the candour with which this is now expressed.
From an investment perspective, clarity, even when uncomfortable, is often preferable to diplomatic ambiguity. Markets have historically adapted well to power-based systems, provided conflict remains contained.
The United States: burden-shifting, not withdrawal
Recent remarks from President Trump reinforce a consistent strategic stance:
· Continued commitment to NATO, but with higher expectations of European self-reliance
· Viewing Ukraine primarily as a European security responsibility
· A willingness to use tariffs as a negotiating tool, even at diplomatic cost
This reflects burden-shifting rather than isolationism. The US continues to project power globally, particularly in Asia, while seeking to limit open-ended commitments elsewhere.
Spheres of influence are becoming clearer
· The Americas, including the Arctic, are viewed as strategically vital to the US
· Greenland’s importance stems from defence, geography, and critical minerals
· China continues to expand its influence through trade, infrastructure, and military capability
While tensions remain elevated, particularly around Taiwan, the base case remains pressure rather than war.
What we expect next
· No direct conflict between major powers
· Ukraine likely to remain unresolved in the near term
· Continued Chinese pressure without invasion
· Increased US sanctions enforcement
· Negotiated outcomes around Arctic defence and resources
Investment implications
From an investment standpoint:
· Defence spending is a structural tailwind
· Energy supply growth helps cap inflation risks
· US technology leadership continues to drive productivity and market strength
Geopolitical risk remains elevated but it is not incompatible with market progress.
Our view
The defining feature of today’s geopolitical environment is not chaos, but clarity. For investors, the appropriate response is not retreat, but selectivity, focusing on regions, sectors, and businesses aligned with:
· Energy security
· Defence capability
· Technological leadership
We continue to position client portfolios with these realities firmly in mind.
If you would like to discuss how global developments may affect your own portfolio or long-term plan, please do not hesitate to contact us.
Please note: This communication is for information purposes only and does not constitute investment advice.
