Trump 2.0: new world order offers both chaos and opportunities for investors
The global economy is suffering from the unpredictable direction of President Trump's US foreign policy. Historically high import tariffs and a diplomatic approach based on confrontation and power plays are leading to global uncertainty. How can investors navigate such turbulent times effectively? Siegfried Top and Jeroen Van Boeckel, both strategists at KBC Asset Management, share their insights in the podcast: Time for impact: How to invest in the new world order?
'A lot of investors seem to have lost faith in America,' says Top. The stock markets swing back and forth between optimism and pessimism. Confidence in US government bonds and the dollar is starting to falter. 'The biggest issue is the uncertainty created by Trump's policies. Investment decisions around the world are being delayed as a result,' summarises Top.
Trade war with China tops geopolitical agenda
Confrontation with China occupies a prominent place in Trump’s foreign policy agenda. According to Top, the intensity of the trade war between the two countries is an indication that this is no ordinary trade dispute: 'The US goal is to bring a permanent halt to China's rise and dominance,' he says. This is reflected in far-reaching measures such as high import tariffs on Chinese products, pressure on technology chains and strategic manoeuvres around critical raw materials. 'China is also playing hardball,' says Top. 'The Chinese are better prepared now than they were in Trump's first term. They want to do business, but not at any price.' 'And bear in mind, China is much further ahead in terms of technology than anyone might think, despite all the recent restrictions,' Van Boeckel adds. 'Just look at the DeepSeek narrative, or advances in quantum computing. The race for technological advancement is one where the stakes are huge. Whoever wins that race can acquire a huge economic and even military advantage.'
Europe: balancing on a tightrope
Europe is indirectly but substantially affected by the geopolitical realignment. The EU can no longer rely on cheap energy from Russia, cheap goods from China or the US security umbrella. 'Navigating the new geopolitical reality will without doubt be one of the big challenges for the coming years,' says Van Boeckel. 'Greater strategic independence is an absolute must'. But European decision-making is not always straightforward, and the US is increasingly bypassing the European Commission to negotiate directly with Member States. 'We are like a ship with 27 captains,' says Top. 'It’s important to maintain unity, but we also need to be pragmatic so as not to put European companies at too much of a disadvantage, for example through excessive regulation. 'It is increasingly akin to balancing on a tightrope,' Van Boeckel stresses. 'Geopolitics today seems to be more transactional, dominated by more personal relationships and emotions, with less reliance on free trade and other liberal values.'
There is no reason to pull out of US stocks long-term. The US remains a large market with innovative and competitive companies.
Siegfried Top, Strategist at KBC Asset Management
As an investor, how do you stay afloat in these turbulent times?
'Emotion is never a good counsellor,' warns Van Boeckel. 'In volatile markets, prices can fall quickly but recover just as quickly.' Top recommends following three principles to help navigate this volatility. First, building a solid foundation, with a globally diversified portfolio of both equities and bonds, incorporating mainly European bonds. In addition, flexibility is essential, so as to be able to move quickly when new developments arise. Third, he advises investors to focus on strategic trends that transcend geopolitical turbulence. 'The most fundamental trends remain intact,' Van Boeckel stresses. 'Think of things like technological innovation, with AI taking centre stage, and cybersecurity.' In this context, Top points to opportunities outside the pure technology segment. 'Investing in AI means investing not just in chips or hardware, but also in data centres, cloud infrastructure and applications. Think of self-driving cars, AI agents, or intelligent robots. The future is approaching very fast. As an investor, it’s vital to keep pace with that.'
The race for technological dominance is one where the stakes are huge. Whoever wins that race can acquire a huge economic advantage.
Jeroen Van Boeckel, Strategist at KBC Asset Management
Going against the tide?
Despite Trump's disruptive style, Top says writing off the US completely as an investment destination is not an option: ‘There is no reason to pull out of US stocks long-term. The US remains a large market with innovative and competitive companies.’
The global economic order may have been shaken up, but panic is not an option. 'The best thing investors can do is to maintain focus and composure and not lose sight of their long-term vision,' advises Top. Van Boeckel endorses this view: 'Being a contrarian and sometimes going against the tide often pays off in the long run. And no matter how erratically the geopolitical winds are blowing, some trends are simply too strong to ignore.'
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The content of this article is for information purposes only and should not be considered as investment advice.
