Playbook

Deglobalization Playbook

The cumulative effects of a worldwide pandemic, supply chain issues and geopolitical instability are helping to drive a seminal shift away from globalization.

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July 27, 2022 | 15 minute read

Globalization—among the most potent forces driving the economy and markets over the last four decades—is reversing. Our playbook explores the many implications of this seminal shift and analyzes how it will fundamentally alter the investment backdrop.


Globalization surged from the 1980s to the mid-2010s, bringing with it a tsunami of cheap goods that reinforced the low macro volatility of the Great Moderation. This environment enabled corporate profits to soar, delivering unprecedent equity market returns fueled by exploding free cash flow margins.

But globalization has likely peaked, with wide-ranging consequences for the global economy, policymakers and investors. What started as trade tensions between the U.S. and China has been steadily ratcheted higher. The pandemic showed the multi-decade global integration of supply chains is now a glaring vulnerability. Geopolitics has laid bare the need to reassess energy and other commodity reliance, and to pivot to strategic partners.

Globalization expanded for decades, and the shift away will likewise be measured in years and decades, not months or quarters. But there are already signs that some unwinding of globalization has begun. High U.S. inflation, the rapid and aggressive monetary policy cycle, and volatility in financial markets are due in part to the early anticipation that we are entering challenges that feel unlike the past several decades. Our playbook breaks down how deglobalization stands to impact investors, and where in the world to find investment solutions.

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

All investing is subject to risk, including the possible loss of the money you invest.

Andrew Korz, CFA

Executive Director, Investment Research

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