What happens when the global order undergoes seismic changes, and the outcomes are uncertain? How can investors prepare portfolios to for such cyclical and structural changes to capture opportunities and avoid the risks?

Selena Ling
Global Markets Investment Officer,
Bank of Singapore

What happens when the global order undergoes seismic changes and the outcomes ahead are uncertain?

How can investors prepare portfolios to withstand such cyclical and structural changes in order to capture the opportunities and avoid the risks in the next chapter?

Since President Donald Trump’s inauguration this year, global businesses and markets have been buffeted with uncertainty, grappling with the potential impact of tariff policies, US fiscal sustainability and the Israel-Iran conflict on inflation, growth and overall investment performance. The Trump administration has catalysed the start of a global shift away from the US-led order of free markets, free trade and globalisation.

Over the next five years, these five key Supertrends covering geopolitics, macroeconomics, asset allocation, technology, environment and demographics, will guide investors and businesses:

1. Changing World Order – Borders and Barriers
2. Robust Asset Allocation
3. The Intelligence Economy – AI
4. Search for Security
5. Living 2.0 – People and Places

These long-term insights were derived from the collective insights of Bank of Singapore’s Chief Investment Office (CIO) and Global Advisory Council (CIO GAC). Since 2024, this group of thought leaders from think tanks and investment firms worldwide have augmented CIO investment insights for wealth management clients in building long-term portfolios, for every generation.

Changing World Order: Borders and Barriers

The new world order of geopolitical rivalry, rising trade barriers, hostility to immigration and widening populism is rapidly replacing the US-led order of free markets, free trade and globalisation that prevailed since the end of the Cold War.

This emerging new order may keep evolving for the rest of the decade, as coalitions come together on common interests (e.g. Europe and China on climate change, free trade) while opposing on other issues (US, Europe, Japan and India versus China on Indo-Pacific security).

This shift from a US-led order to a more fragmented world, will result in persistent inflation, higher interest rates, a weaker USD, record gold prices and stronger demand for safe haven assets over the next five to 10 years.

Robust Asset Allocation

Markets are inherently uncertain, and conditions shift quickly and unexpectedly. Today’s environment of economic regime shifts, policy instability, and increasingly correlated risks indicate that asset allocation under a period of uncertainty will demand greater discipline.

A robust asset allocation is not a specific weighting or expression within the portfolio – it is the architecture that governs the portfolio’s construction. By explicitly acknowledging that market inputs are uncertain – returns, volatilities, correlations – robust optimisation enables portfolios to hold up not just in the expected scenario, but across a wide range of outcomes. This shift from precise prediction to resilience by design is central to investing in an uncertain world.

This approach to portfolio construction complements our long-held view of the diversification benefits of alternatives and gold amidst the shifting regimes in global markets. This translates into more resilient portfolios, better downside protection, and more reliable alignment with investor goals.

The Intelligence Economy – AI

Companies across major markets are ramping up their AI-related investments, with the bulk of the expenditure largely aimed at transforming critical business functions, developing new products and services, and enhancing individual productivity.

Agentic AI will be the next frontier in the application of this technology, where models will go beyond question-and-answer large language models (LLM) capabilities to executing real world tasks. This will lead to a broadening of AI beneficiaries beyond semiconductors/cloud-service providers to a longer-tail of players across industries.

We see the proliferation of AI use cases across sectors using inherently rich datasets such as financial services, healthcare as well as manufacturing/logistics. AI applications are increasingly centred around predictive analytics, monitoring and detection, as well as advanced pattern recognition.

Search for Security

Fundamental enablers of modern life, such as energy, food and digital networks, will need to be actively secured amid shifts in climate, geopolitics and technology.

With higher frequency of extreme weather events due to global warming, climate adaptation investments of USD215-387b annually by 2030 will be required for developing countries alone.

With military conflicts in Russia-Ukraine and the Middle East conflict, elevated geopolitical tensions and America’s retreat form multi-lateral alliances, there is added urgency for nations to increase military spending, ensure supply chain resilience and cybersecurity.

Living 2.0 – People and Places

The twin demographic dilemma of a shrinking labour pool tasked with supporting a growing senior population is becoming a global phenomenon.

Macro impact of an ageing population includes downward pressure on inflation, growth and fiscal balances, with ambiguous net effect on interest rates.

Solutions and opportunities to address a shrinking workforce include an appropriate human capital strategy, robotics and AI. Shifts in consumption patterns will present tailwinds for Healthcare, Nutrition, Travel & Leisure and Wealth Management including Insurance.

With global warming, climate migration may intensify, but it is still unclear how such cross-border movements will impact demographics.