The world in part is moving from an ethos of globalism to protectionism – but it can be difficult to assess the extent to which this will continue and how investors should react to such a movement globally, Professor Amin Rajan, CEO, CREATE-Research, told delegates at CAIS 2018.
Rajan was chairing a panel called ‘Living through regime shifts: creating new investment opportunities’ and he started by asking the panel to consider some big questions. “People are asking if there is a regime shift occurring and what the consequences might be if there is. They can be hard to spot but they are always very important in hindsight,” he said. “People are worried about the move to populism but the problem I how do they react?”
Darsh Preet Singh, managing partner & CIO, Hazoor Partners, agreed that it was important to pay close attention to this possibility. “We are seeing political instability and more right wing, nationalist parties gaining traction. But having an understanding of the implications of this for investors is important.”
Mark Yusko, CEO and CIO Morgan Creek Capital Management, added that the phenomenon is borne out of the growing inequality in the world. “The have-nots get upset. But they get upset slowly. Yes, globalization has also lifted many out of abject poverty but above that level there are still a lot of very poor people who barely get by.
“Populism is a natural reaction to that. But people forget that nationalism and protectionism always come with negatives. We have seen economic downturns and the collapse of currencies as a result of these policies in the past. We need to remember those lessons.”
Carl Stork, President, Ciconia & Co, added that although a number of parties and politicians have won power based on populism, the policies they have then implemented have actually been more moderate in reality than they originally promised. “But I just hope we have the leadership that understands the mistakes of history. Too much protectionism is never good. But, as always, investors should consider diversifying their investments into areas that can withstand such change if needed.”
2018 Cayman Alternative Investment Summit, Investors, Amin Rajan, Create Research, Morgan Creek Capital Management, Mark Yusko, Hazoor, Ciconia, Cayman