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Newton: On the defensive

With protectionist measures on the increase globally, we discuss some of the opportunities and risks for investors.

  • One of our state intervention theme’s key areas of focus – ‘offence & defence’ – considers the investment implications as electorates demand more protectionist agendas, while China’s rapid ascent is reinforcing calls for the pursuit of more nationalistic economic policies in tandem with significant increases in defence spending.
  • The pandemic has prompted questions regarding the robustness of supply chains. Further reshoring initiatives may be forthcoming for strategically important industries, but there could be limited traction unless major new incentives or barriers to trade emerge.
  • While government budgets are clearly under pressure as a result of the pandemic, global defence spending is likely to continue growing, as the US and its allies respond to China’s military expansion.
  • As a more interventionist approach looks a distinct possibility, there is a risk that economies end up becoming progressively more ‘managed’, which could weigh upon productivity and returns.

Our long-standing state intervention theme explores how, since the 2007-8 global financial crisis, governments and their associated monetary authorities have engaged in ever-greater policy intervention and regulation to shore up economic growth.

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