The era of globalisation that shaped economic growth and investment strategies for decades appears to be receding, giving way to a more fragmented and regionalised world. This transformation, variably described as deglobalisation, reglobalisation, slowbalisation, or fragmentation, is reshaping the macroeconomic environment amid intensifying geopolitical tensions, supply chain disruptions, tariff barriers, and trade wars. Such dynamics are prompting private market investors to rethink their strategies across private equity, infrastructure, private credit, and real estate sectors.

Experts agree that the peak of globalisation, particularly notable in the 1980s through early 2000s, is unlikely to return. Tina Fordham, geopolitical strategist and founder of Fordham Global Foresight, characterises recent crises—from the global financial crash to the pandemic and geopolitical conflicts—as pivotal in unfolding a "new normal." She underlines that the reconsideration of global supply chains and geopolitical alignments is not a transient phenomenon but part of a sustained shift. Gordon Bajnai, CEO at Campbell Lutyens, emphasizes that reversing globalisation entails inherent societal costs, notably inflation, as relocating production from cost-effective to more stable regions increases expenses and fuels political instability.

This reorientation involves significant rerouting of global trade. COVID-19 disruptions, such as port blockages and border closures, compounded by the Russia-Ukraine conflict and U.S. tariff policies, have accentuated the urgency to diversify supply chains. The concept of reshoring and friend-shoring—moving production closer or to allied nations—is gaining traction. One Equity Partners, among others, anticipated this shift early, strategically positioning portfolios towards nearshore manufacturing to buffer against tariff volatility. Trade between geopolitically aligned nations has risen since 2018, whereas trade between rivals has declined, further evidence of evolving regional trade corridors.

In the Asia-Pacific region, countries like South Korea, Japan, India, and emerging ASEAN economies such as Vietnam, Malaysia, and Indonesia play pivotal roles in this new trade architecture. McKinsey Global Institute’s findings suggest ASEAN nations are increasingly serving as intermediate hubs linking China and the US in supply chains, highlighting a complex interdependence rather than outright decoupling.

These shifts have profound implications for infrastructure investment. Transportation assets such as ports, airports, highways, and rail networks may see new greenfield opportunities aligned with emerging trade routes. Conversely, some existing infrastructure risks becoming stranded as previous trade patterns become obsolete. Real estate sectors, notably logistics, are also impacted, with increased demand for distribution space as supply chains duplicate to mitigate risks. Meanwhile, geopolitical considerations influence sectors like hotels and student accommodation, as shifts in international mobility alter demand patterns.

Energy transition emerges as a critical area intersecting with deglobalisation and investment. While uncertainty clouds clean energy investments in the US, Australia benefits from its abundance of critical minerals essential for renewable technologies, bolstering its strategic importance. David Scaysbrook of Quinbrook highlights Australia's potential to export refined minerals and solar manufacturing capacity to Europe and the US, aligning with shifting global demand in energy infrastructure. Yet uncertainty remains in the US market, where some investors hesitate, creating potential relative value opportunities in Europe, as noted by Healthcare of Ontario Pension Plan’s Lori Hall-Kimm.

Despite shifting preferences, the US remains a dominant and attractive market for private equity, driven by its strong historical returns and dynamic capital markets. Roberta Brzezinski of Control Risks notes that private equity’s emphasis on service sectors somewhat shields it from direct impacts of supply chain reshuffling. Instead, changes in consumer behaviour and purchasing power tied to macroeconomic conditions will likely shape outcomes. Private credit is meanwhile exposed to challenges from tariff-induced cost pressures and credit deterioration, exacerbated by the broader post-pandemic tightening cycle and asset repricing.

Investor sentiment reveals a cautious recalibration of US exposure. Robert Kaplan, vice-chairman at Goldman Sachs, observes conversations about hedging US dollar risk and reducing US concentration amid the dollar’s notable depreciation in 2025. This dynamic encourages diversification across currencies and geographies, which some describe paradoxically as a form of reglobalisation. Flexibility, swift decision-making, and risk control are emerging as crucial attributes for fund managers navigating this era of rapid change and volatility, as emphasised by Partners Group and Palladio Partners executives.

Looking ahead, the role of government in the economy appears set to increase, with more direct intervention through industrial policy and strategic investments, marking a departure from market-driven forces that dominated prior decades. This change could further shape the investment landscape, requiring adaptation beyond nostalgia for past globalisation paradigms.

In sum, the private markets face a complex, evolving environment where geopolitical fractures and supply chain realignments intersect with macroeconomic pressures and sustainability imperatives. Increasingly, success hinges on agility, diversification, and an acceptance that the new global economic order demands investment approaches attuned to fragmentation and resilience rather than the seamless integration that once defined globalisation.

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Source: Noah Wire Services