A slowdown or reversal of globalization does have some long-term implications for the world’s economy, especially in technology. While Bremmer argued that tensions over trade and intellectual property between the U.S. and China would lead to two different technological systems, with the rest of the world choosing sides, he also said that much of the old, commodity-based economy will continue to globalize.
Even so, any slowdown in globalization will take a bite out of growth, Semple says.
“If we’re not looking at deglobalization, at least the rate of globalization is going to slow down,” Semple says. “The rate of income growth is going to decline.”
The bifurcation of new technology between U.S. and Chinese spheres of influence will not slow the evolution of technology, said Bremmer.
While he discussed the displacement of labor by new technology, tech at the same time offers an opportunity for growth-minded investors, especially as some technology elements may be deglobalized and localized within emerging markets.
“Technology is where we’ve seen the biggest change,” says Andrew Mathewson, a portfolio manager of global emerging markets at Legg Mason’s Martin Currie Investment Management. “Ten years ago, emerging markets were the low-cost assemblers of technology consumed by developed markets. Today we’re talking about having emerging market intellectual property for key pieces of technology like the memory in your smartphone, the display and the cameras.”
Mathewson also points out that much of the technology for electric vehicles is based on intellectual property that resides in emerging markets.
While phase one of a trade deal between the U.S. and China was signed earlier this year, the investors still identified international trade as a potential source of risk.
“The problem with trade is that it’s in the hands of one to two people, one of whom has made a whole career out of being disruptive,” Semple says. “How do you handicap that for investors? It’s really hard. It’s probably the biggest risk we get cited to us.”
Bremmer said not to expect a phase two of the U.S.-China trade deal. He said China’s rise as a direct competitor to the U.S. is a potential risk. The asset managers, though, described China as an opportunity.
“The key for investors is what is the difference between markets, and to a large extent, that depends on China,” Semple says. “China is the largest part of emerging markets in terms of growth. We can disagree on what the real number is now in terms of growth, but it doesn’t matter. The stimulus the Chinese have been engaged in for the last year and a half is starting to have some nice impacts in terms of growth.”