Companies must invest according to the new geoeconomic environment.

Geopolitical Changes Shift Investment Landscape

Recent geopolitical shifts are altering the investment scenario, says Mathilde Lemoine, Chief Economist at Edmond de Rothschild Group. She explains the consequences of the transition from globalization to a power rivalry policy. Interviewed by Clément Martinet.

This analysis stems from a decade of research. What we are witnessing is not a resurgence of geopolitics, but a regime shift. Since the early 21st century, we have been transitioning to a global economy structured in blocs, constraining trade, capital, and technology flows with sovereignty logic. We have moved from a prosperity-oriented globalization to a “power rivalry” policy. This transition creates inherent uncertainty as current US and Chinese policies may lead to a new global balance, grounded in bloc logic.

“Sovereignty is the geopolitical goal, but no longer in the Westphalian sense of the 20th century. States are no longer seeking isolation but reconfiguring dependencies while enhancing economic policy control. Contemporary sovereignty is interdependent, with nations selecting dependencies rather than eliminating them. This new sovereignty form, termed ‘useful vulnerabilities,’ is based on selective flow control.”

What are the consequences of this geopolitical influence?

This restructuring has visible global repercussions. The emphasis on reducing China-US dependency has led to new integration axes like India-Gulf-Europe, ASEAN-Africa, Brazil-ASEAN, and increased trade between major emerging economies. Foreign direct investments are redirected based on accepted vulnerabilities. This new geo-economy also sparks short-term growth due to economic power playing a geopolitical role. However, structural uncertainty escalates capital costs.

“In the 1970s, geopolitics played a significant role in oil prices. But from 1991 to 2022, these influences were less enduring. Today, we face political fragmentation and economic interdependence, contributing to uncertainty.”

How does the current geopolitical influence differ from past shocks like the Cold War or oil crises of the 1970s?

Historical perspective highlights the hybrid fragmentation combined with economic interdependence we face today, creating uncertainty. The US has become a net energy exporter, altering the impact of oil price hikes. Europe’s energy dependency exposes vulnerability, especially concerning gas prices. Geopolitical adjustments shape contemporary sovereignty, impacting global dynamics

Bombings in March 2026 escalated oil prices over $100 per barrel. How does this shock affect bond and stock markets?

Oil price surges affect not only oil prices but also European gas prices, industrial capacities, Gulf countries’ economies, and global supply chains, sparking wider economic impact than oil price hikes alone. Bank tightening may follow prolonged price hikes.

Do you foresee continued energy risks through 2026?

Regardless of the scenario, central banks struggle to influence long-term rates amid broader political tensions. Europe faces prolonged supply chain disruptions.

Intervention in Venezuela and Iran affects US assets. What does this signify?

The US aims at regional stability to secure vital supply chains. Increased intervention marks a shift towards interventionism, encouraging foreign investment, hence stabilizing bond prices.

How will increasing Sino-American tensions impact semiconductor supply chains?

Nations seek semiconductor diversification, affecting global economic stability. Europe lags in this restructuring, posing challenges. Strategic investments and human capital remain vital for innovation diffusion.

Disorder persists globally. How does this shift impact investments?

This transitional phase necessitates investment to adapt to the globalization-power rivalry transition. Sovereignty investments, value chain reconfigurations, and productive capital and human resources offer investment opportunities in this changing landscape.

^{In 2022, the ‘Regional comprehensive economic partnership’ agreement aims at regional economic integration among Asia-Pacific countries.}