BlackRock's Larry Fink, Pershing Square's Bill Ackman and Oaktree's Howard Marks are just some of major investors who have called out what they believe to be the decoupling of economies across the world – the end of globalization. I've had numerous meetings with investors and executives over the last few weeks, who echo these concerns.
No one knows the extent to which deglobalization will occur and what the overall impact will be, but most agree it will be additive to the inflation that's already seething through the economy.
Given all of this, I was surprised to see that 89 percent of the 400 investors probed in the new CNBC Delivering Alpha survey did not change their investing strategy as a result of Russia's invasion in Ukraine. Separately, they were asked whether the war will alter the Fed's planned rate hikes, and nearly half of respondents believe it "won't impact Fed policy much."
Perhaps, this is because something like "deglobalization" is difficult to measure and model. Or maybe it's because the severing of economic ties (Russia aside), if it occurs, would take years and possibly decades, and wouldn't be reflected in present values. Or, it's likely that at least some of these investors are in the camp that "deglobalization fears" are overblown.
Either way, they're not being shy about investing outside the U.S. While the majority – 55% – think the U.S. will be the best place to park their capital, the rest believe outperformance will stem from emerging markets (29%), international developed markets (8%) and China (8%). In other words, investors aren't completely shunning other markets quite yet, and they actually see opportunity in them.
When we spoke with Gramercy Funds' CIO Robert Koenigsberger for this newsletter a few weeks ago, he noted that all markets will not be treated equally in light of the events in Europe.
"Immediately, you can start to see winners and losers within emerging markets," Koenigsberger, who runs $5.5 billion for his emerging markets investment firm. "You start with oil, you start with commodities, you try and figure out which side of a country or corporation might be on that."
The example he gave was that there are some places like Mexico that are exporting oil; some places like Turkey, that are importing energy.
It appears that investors in our recent survey took that advice. When asked which three sectors will be the biggest winner in 2022, the most popular choice was energy, with 70 percent selecting it.
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