Shifts in Trade and National Security Priorities Split Globalization Into Two Tracks, PGIM Research Finds

“Rising geopolitical tensions and expanding trade restrictions may appear to signal the globalization pendulum has swung hard in the opposite direction, pitting national interests against a shared global good. Yet the reality is far more nuanced.” -- Shehriyar Antia, Head of Thematic Research, PGIM
For investors, this “dual-track” world offers new opportunities and risks across countries and industries such as AI, high-end semiconductors, 5G telecommunication networks, critical minerals, fossil fuels, electric vehicles and military technology, highlighting the need for stress-testing portfolios and managing strategic investments within a dynamic and fragmenting global economy.
In “A New Era of Globalization,” PGIM’s Megatrends research team dives into the concept of this dual-track globalization era, finding that despite recent tariff activity and the prospect of a prolonged trade war, around
“Rising geopolitical tensions and expanding trade restrictions may appear to signal the globalization pendulum has swung hard in the opposite direction, pitting national interests against a shared global good. Yet the reality is far more nuanced,” said Shehriyar Antia, head of Thematic Research at PGIM. “Even if America’s ‘small yard’ of protected industries grows larger, roughly
Investment opportunities exist despite new risks in trade and supply chains
Investors shouldn’t ignore industries on the decelerating track of globalization simply because of the presence of tariffs and industrial policy. Instead, they should consider the structural advantages that specific companies and parts of the value chain may have over others:
Artificial intelligence and advanced semiconductors – The great power rivalry between
Electric vehicles – Manufacturers such as Tesla and China’s BYD have taken an early lead as the world shifts to EVs. Despite facing steep tariffs in
Metals and minerals – Projected long-term demand for metals like copper, critical to several major industries, currently exceeds supply. Two pure-play copper miners — Ivanhoe Mines and Ero Copper — may offer solid growth prospects, while Southern Copper and Freeport-McMoRan are large diversified producers with economies of scale.
Identifying national winners
Investors may find attractive opportunities in countries well-positioned to become near-shoring candidates — with existing manufacturing capabilities, privileged access to free-trade zones or comparative advantages in their business environment and labor costs:
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Chile andPeru as key suppliers of high-demand minerals such as lithium and copper. -
Brazil for rapidly ramping up its mining of critical minerals, going from zero exports to becoming the world’s fifth-largest exporter of lithium in less than two years.
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Australia for broad metals and minerals. -
India for scaling advanced electronics and pharmaceuticals. -
Vietnam for its low-cost manufacturing base in apparel and electronics.
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Poland and Czechia as near-shoring hubs for EU manufacturers competing with Western Europe’s higher production costs. -
Morocco for pharma and auto supply chain operations relocated closer toEurope .
“Protectionist trade policies and industrial policies are firmly back in fashion and creating real turbulence in global markets,” said Taimur Hyat, PGIM’s chief operating officer. “Over the long term, however, producing goods where they can be made most inexpensively and efficiently remains a compelling force for firms and their investors, making it likely that globalization will prevail for industries making up the majority of the global economy that do not easily fit into a national security narrative.”
For more, read “A New Era of Globalization: Shifting Opportunities in a Dual-Track World,” or visit pgim.com/megatrends for additional insights for investors.
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