Friendshoring, nuclear buttons and a space race: what geopolitics is telling investors

Nationalism and nuclear capabilities

As the world de-globalises, nations nationalise.

Conspiracy theories such as the New World Order, which has been around since at least the 1980s, have been given a new lease of life thanks to the AED of social media and AI, and these are influencing politicians and voters alike.

Politicians know how to dog whistle, and to whom, and it's certainly not helping to unify people with differing opinions.

Plassard says this trend is happening all over, with countries one might never have expected to pander to a populist movement starting to head down this direction.

He explains: "It does feel that people are supporting popular movements that promote nationalism rather than having a global or even a continental outlook. 

"We've seen this in Europe and the US and elsewhere. You know, there are many reasons for it and uncertainty is the big one.

"When you have so many political, economic and monetary uncertainties, it is natural for people to retrench, to think about themselves and their families first. Countries are no different."

And nor are investors, who he says often tend to bulk up domestic allocations at the expense of global diversification during times like these. 

But when it comes to influential countries such as the US, UK and India, a growing nationalism might prove sticky in terms of heads of state picking friends to be on their team in this election year, let alone investors deciding on country allocation.

For example, politically, India balances trade with Russia - its share in India's total trade volume rose to 3.54 per cent in 2023, compared to 1.27 per cent in 2021-22 - with support for Israel and the US. 

Under the pretext of combating Islamic terrorism, a strong nationalist movement in India has seen increasing violence against any minority religion - Christians and Muslims alike both experiencing persecution - and this has added to tensions with neighbouring Pakistan.

As the Asia Times reported last week (May 3), there is a naval arms race happening, with China helping Pakistan launch a new Hangor-class submarine, while India unveiled a new anti-sub weapon. All three countries have nuclear weaponry.

In fact, the list of nine nuclear-weapon nations (listed alphabetically) do not make for comforting reading:

With rising nationalism going hand-in-hand with nuclear capability in nearly all of these countries, are we nearer that metaphorical midnight, or has the new Fallout series just spooked us?

The Bulletin of the Atomic Scientists wrote in 2024: "A moment of historic danger: it is still 90 seconds to midnight."

And, with 30 EU and UN sanctions currently in place against some of these nuclear powers - with the threat of further sanctions to come - this means many long-term geographical allocations in portfolios must be rethought, rather than maintaining their current leanings towards the US and its Magnificent Seven.