HOW TO INVEST IN A CHANGING WORLD ORDER

The global economy and investment landscape is undergoing major transformations, especially following US President Donald Trump's tariff announcements on April 2, which have reshaped the world trade order.

- Dr Piyasak Manason heads the Investment Strategy Department, INVX-Research Group, at InnovestX Securities.

The broadest index of US stocks, the S&P 500, declined sharply after Trump declared “Liberation Day”, though it has since recovered above pre-announcement levels after the US and China agreed last week to reduce tariffs for 90 days. Under the agreement, China reduces tariffs on US goods from 125% to 10%, and the US cuts its levies on Chinese goods from 145% to 30%.

However, trade war signals remain uncertain as Trump prepares to unilaterally set country-specific tariffs rather than engaging in bilateral negotiations, with more than 150 countries expecting to receive notification letters to be enforced in the next 2-3 weeks.

This phenomenon aligns with a theory advanced by the billionaire fund manager and author Ray Dalio about major changes in the world order. He recently cautioned that we are facing a “great collapse” in the global economic, political and geopolitical order.

He states that every 75 years (±25 years), there is a shift in major powers, and the US has been the dominant power for more than 80 years, meaning there is a high probability of its decline.

Three main factors drive changes in world powers: large debt cycles, class inequality, and the emergence of new powers challenging existing ones. When new powers challenge existing ones, five types of wars occur: trade, technology, capital, geopolitical and military conflicts, which may end with the defeat or weakening of the existing main power.

US PAST ITS PEAK