Signals in the Storm: From Emerging Markets to a Changing World Order

Signals in the Storm: From Emerging Markets to a Changing World Order 

We are fast approaching the end of the year, and it's been a great one for investment markets.

Yet, social media and news headlines of late have been a clear reminder that stability is not a given. We have seen the end of the longest US government shutdown in history, persistent geopolitical friction from the war in Ukraine to new tensions in the Middle East, and growing policy fragmentation as nations rewrite rules on trade and technology. 

It is easy to get lost in this daily noise. But what if this volatility is not just noise, but a signal of a deeper, structural shift?

OMIG’s Chief Investment Officer Siboniso Nxumalo, drawing on decades of investing in emerging markets, offers a powerful framework for understanding this new reality in his article, "Signals in the storm."

This turbulence has also created intense confusion in the world of responsible investing. The term "ESG" itself is caught in a political crossfire. In their second featured piece, they ask: "Is it time to drop the ESG acronym?", which you can read by clicking on this link: 

Together, these articles provide a guide to understanding the structural shifts at play and navigating the path forward.

After reading Ray Dalio’s The Changing World Order, I reflected deeply on my journey in financial markets. His central idea that the world moves through repeating cycles of debt, power, and renewal is not a theory; in fact, most of us have already lived through these cycles. For me, it was not in the halls of empire that I was exposed to these serial cycles, but in the messy, exhilarating world of investing across global emerging markets. 

Looking back to a period between 2011 and 2018, as part of a team managing a long-only emerging markets equity fund, investing across more than twenty developing economies, we moved through cities that were rewriting their own futures – from the traffic-choked ambition of Mumbai, the industrial pulse of Shenzhen, the political theatre of Brasília, right through to the vibrant optimism of Johannesburg. Every city was its own experiment in progress, rising, stumbling, reforming and reinventing.

It was interesting to watch how swiftly confidence could turn into panic, how capital could flee at the first hint of political turmoil, and how extraordinary companies emerged strongest from chaos. Markets, much like nations, are governed not just by numbers but by cycles of belief and disillusionment, of excess and correction. The same forces Ray Dalio wrote about – debt, inequality, conflict, and the erosion of trust – were already visible, not in textbooks, but on the ticker tape and trading screens we lived by every day. 

Looking back, what we were experiencing in emerging markets then was not peripheral to the global markets story; it was a preview. The turbulence that once defined the developing world has now spread to the developed one. The world that Dalio described was already forming on the horizon; we were standing closer to its front line in emerging markets.

Back in 2017, I wrote that by 2020, New York City would fall out of the top 10 largest cities on earth, overtaken by metropolises that most Western investors still viewed as exotic. Since then, this prediction has materialised. I argued then, as many did, that emerging markets were the future – young, fast-growing and full of potential.

At the time, the West set the tempo. We thought in dollars, measured success in basis points off the US yield curve and interpreted global risk through the lens of Wall Street. Emerging markets were seen as the outer orbit. Eight years later, the roles have reversed. The frontier has become the centre, and Trump’s targeted attacks on BRICS+ indicate the threat they have become to the global order.

The End of the Easy Money Cycle

With the US having hit its highest debt level in history, currently sitting at over US$36 trillion, debt has become the defining feature of the Western model.

For four decades, investors rode a tailwind of globalisation and leverage; those tailwinds are now headwinds. Capital is more expensive, geopolitics matters again, and the assets once considered safe no longer offer the same protection. The US Federal Reserve, which once absorbed shocks, is now a source of volatility.

From Peace Dividend to Power Play

After the Cold War, Western nations enjoyed what economists called the peace dividend. They spent less on defence and more on consumption, technology and comfort. That era has once again ended. The wars in Ukraine and the Middle East have reminded us that peace is fragile and that energy, supply chains and territorial security have strategic value again.

Meanwhile, China has asserted itself as both an economic and a military power. Its Belt and Road Initiative, technological leadership, and growing influence in BRICS+ signal a deliberate reshaping of the global order. Trade wars, sanctions and tariffs, including those proposed again by Donald Trump, are not just political theatre; they are instruments of competition.

I remember the feeling in 2016 when political risk migrated from the developing world to the developed one – we saw Brexit, Trump, and populism in Europe. The old assumption that advanced economies were stable and predictable began to crumble. Back then, we noted that developed markets were starting to behave like emerging ones, while many emerging markets were maturing, reforming and stabilising.

A Line That Blurred Long Ago

As an emerging markets manager, I had always operated in a world of political noise. We saw Brazil’s president being impeached and Turkey’s government surviving a coup attempt; South Korea’s leadership was on trial, while South Africa’s own political struggles dominated headlines. These were the environments that created opportunities, because panic often caused markets to misprice good businesses.

But then the same drama started unfolding in developed markets, and the line between developed and emerging became blurred. Today, the same characteristics we once associated with emerging markets – fiscal recklessness, policy uncertainty and populist politics – are visible across the developed world.

The distinction no longer lies in geography but in behaviour. The question is not whether an economy is developed or emerging, but whether it is disciplined, adaptable and capable of reform.

The Rise of the East 

When one of the planners in our team stood in Beijing in 2017, he was struck by what I thought was missing. No Google, Facebook or Amazon; only Baidu, Alibaba, and Tencent. It was a glimpse into a world where globalisation no longer meant Westernisation. China had built a parallel digital universe, complete with its own champions, algorithms and ambitions. That independence was an early sign that the balance of technological power was beginning to tilt. 

Today, the world’s most valuable technology companies may still be listed in the US. Still, the foundations of their dominance, the semiconductors that power artificial intelligence, are manufactured mainly in Taiwan, by what is arguably one of the most important companies in the world: Taiwan Semiconductor Manufacturing Company (TSMC). This single firm produces the chips that underpin the modern digital economy, from iPhones to data centres to self-driving cars. 

It is no coincidence that a tiny island producing the world’s most advanced chips has become the focal point of great power rivalry. China regards Taiwan as its own province, and its ambitions for “reunification” have placed technology supply chains and geopolitical sovereignty on a collision course. The tension that simmers across the Taiwan Strait is not just about borders – it is about control of the technological foundations of the future global order.

Today, the East writes much of the global script. India has become the world’s most populous nation and one of its most dynamic economies. China remains the world’s manufacturing and financial powerhouse. And the Gulf states are deploying capital across Africa and Asia to finance the energy transition and infrastructure. Meanwhile, the West is showing the same signs of fatigue that emerging markets once did: high debt, political polarisation and social division. As Dalio writes, empires rise on productivity, education and unity, and decline on debt, inequality and conflict.

When Trust Erodes, Gold Shines

The rise in gold prices is not about jewellery demand. It is about trust or the erosion of it. Central banks in China, India and Turkey are buying record amounts of gold as they diversify away from the US dollar and question the sustainability of Western fiscal policies. We are moving from an age of financial wealth to an age of tangible wealth. When confidence in paper assets weakens, investors turn to things that are real: energy, commodities, productive land and gold. For a century, financial assets have outperformed real ones. That pendulum may now be swinging back.

Trust and Reliability as Commodities

South Africa stands at the crossroads of this global realignment. As a resource-rich member of BRICS+, it benefits from the East’s appetite for metals, minerals and food security, but its financial markets remain deeply connected to Western capital. That duality can present both strength and vulnerability.

The challenge is to turn relevance into reliability. The world may reward producers of real assets, but only those who deliver them with credibility and consistency. South Africa’s role in the energy transition through platinum group metals, copper and manganese positions it well, provided we maintain policy stability and institutional strength 

For much of the last decade, safety meant owning US Treasuries, mega-cap technology stocks, and the dollar. Today, safety has a new meaning. It lies in self-sufficiency, reliable cash flow and control of essential resources. Gold’s rise is not nostalgia; it is a reminder that trust has become a scarce asset. When faith in institutions fades, investors reach for assets that do not rely on promises to pay.

From Reliance to Resilience

What began in 2016 as political upheaval in developed markets, and what I witnessed firsthand in 2017 across Asia, is now unfolding at a global scale. The US is weighed down by debt, the peace dividend has vanished, and globalisation is fragmenting. The cycle is rhyming with history.

Gold’s resurgence captures the mood of this moment. Its rise is not merely an inflation hedge or a safe-haven trade – it is a reflection of the world’s unease with the US dollar-centric financial order. As central banks in Asia and the Middle East quietly diversify their reserves away from the US dollar, they are indicating their awareness that an overleveraged reserve currency cannot forever anchor global trust. The ascent of gold is, in many ways, a mirror of doubt, a vote of caution against debt-fuelled prosperity and monetary excess, and a signal that scarcity, credibility, and discipline are once again being repriced. 

It is often said that little happens in a year, but a decade can change everything. Now the question is, how far will this changing world order go? What will money mean when trust itself begins to fade? Where will the debt settle, what will security cost, and how will value be measured in a world learning to prize resilience overreach?

We invest for the long term, which is another way of saying we invest in time itself. Our task is to look beyond what moves today and sense what is becoming inevitable, to see the next tide before it crests. Perhaps ten years from now, we will look back on this very moment and realise that the next great shift had already begun, quietly, invisibly, yet in plain sight.

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