PEARLENE GOVENDER | How global megatrends are reshaping offshore investment strategies

There’s been a shift in offshore investing. For the past decade, the space has been defined by a narrow set of drivers, including globalisation, declining interest rates and the dominance of US growth equities. That is changing as we enter a more complex, multipolar environment.

Today, structural forces such as AI, the energy transition, deglobalisation and demographic divergence are beginning to reshape markets. And the question now isn’t whether these trends matter; it’s how they show up in investment portfolios and market returns.

What themes are shaping offshore investing?

There’s no shortage of big themes, but not all are equally investable — and a key challenge for investors is separating what sounds compelling from what is actually driving returns.

Future-proofing isn’t about chasing themes. It’s about building something that can hold up as the world changes

AI and the energy transition are already tangible, and we can see them coming through in company earnings, capital spending and market leadership. Deglobalisation and demographics are slower-moving, but they’re just as important. They shape inflation, growth, and how capital flows over time. While they are less obvious in the short term, they create the backdrop against which the other megatrends play out.

Deglobalisation — or, more broadly, geopolitical fragmentation — affects inflation, trade, capital flows, and policy decisions. It changes how companies operate and where they invest. And importantly, it introduces a level of uncertainty and dispersion that we haven’t really had to deal with in the same way before.

AI and automation challenge one of the core assumptions behind globalisation: that low-cost labour is a durable advantage. If machines can increasingly do the work, then labour costs become less important, and factors such as energy availability, infrastructure and technological capability start to matter more.

This doesn’t mean emerging markets are no longer attractive, but it does change the lens through which we view them. Some will struggle if they can’t move up the value chain, but others — especially those with scale, improving skills, and supportive policy environments — can benefit significantly. The question now is less about cheap labour and more about how countries position themselves in a more capital- and tech-driven world.

In the past, offshore exposure was mostly about geography, developed markets vs emerging markets, and the US vs Europe vs Asia. That framework is becoming less and less useful. Today, a company listed in the US might generate most of its revenue from emerging markets. At the same time, an emerging market company could be deeply tied to developed-market demand. So, it’s less about where a company is listed and more about what’s driving its earnings.

As supply chains shift, investors really have to understand how a business is positioned within that system. Geography alone doesn’t tell you much anymore.

Offshore investing in a complex environment

What does this mean for offshore investors? It means that resilience today looks very different to a decade ago. The businesses that are holding up the best tend to have some combination of pricing power, strategic importance and exposure to long-term capital cycles. This includes such areas as semiconductors, infrastructure linked to electrification and even defence.

On the other hand, parts of the market are feeling increasingly vulnerable, particularly those that rely heavily on cheap labour or highly optimised global supply chains, or that operate in structurally low-margin environments. Previously, efficiency was the goal. Now, resilience matters just as much, if not more.

There’s no such thing as a perfect investment portfolio, but there are portfolios that are better positioned for a wider range of outcomes. This can mean a mix of structural growth areas such as AI and digital infrastructure; exposure to the energy transition (but by focusing on enablers rather than just the obvious plays); real assets and infrastructure that can benefit from ongoing capital investment cycles; and high-quality businesses with pricing power and strong balance sheets.

It is important to remember that future-proofing isn’t about chasing themes. It’s about building something that can hold up as the world changes.

What all of these points indicate is a more complex investment environment. Simply owning global markets may not deliver the same outcomes as in the past. The gap between winners and losers is widening — across sectors, regions and business models. This creates risk, but it also creates opportunity.

The focus now is on being more deliberate, understanding where structural tailwinds exist, where risks are building and which managers are actually equipped to navigate that landscape. All in all, offshore investing hasn’t become less relevant; it’s just become a lot more nuanced.

• Govender is head of long-only manager research at Sanlam Investments Multi-Manager