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Forget False Certainties, Invest in a New World
🇨🇭 Switzerland /Economy & Trade

Forget False Certainties, Invest in a New World

From Le Temps · () French

Translated from French, summarized and contextualized by DistantNews.

At a glance

Analysis Sources not specified Context piece
  • Global capital markets are undergoing a structural transformation, moving beyond familiar economic relationships, according to Mika Kastenholz of LGT Private Banking.
  • This shift is driven by geopolitical shifts, societal changes, public debt, climate change, and artificial intelligence, disrupting the neoliberal economic order.
  • Investors must adapt by thinking in scenarios and relying on historical constants, drawing on LGT's long-standing experience in wealth management.

Mika Kastenholz, Global Head of Investment Solutions at LGT Private Banking, describes the current international capital markets as being at an "event horizon," a point where familiar economic laws collapse. Drawing an analogy from astrophysics, where this term defines the boundary of a black hole beyond which nothing can escape, Kastenholz suggests that investors are in a similar transitional phase. The economic relationships that have guided the past decades can no longer be reliably projected into the future.

Today, the biggest challenge for them is not volatility, but the fact that many assumptions applied in recent decades are no longer self-evident.

— Mika KastenholzExplaining the core challenge for investors in the current market environment.

Kastenholz identifies five key factors driving this structural transformation: geopolitics, societal changes, public debt, climate change, and artificial intelligence. He emphasizes that international power dynamics are at the forefront, stating that history has been "rebooted" and the neoliberal economic order is transforming. Evidence includes the war in Europe, instability in the Middle East, and China's deliberate competition with the United States, leading to new alliances and increasing pressure on the foundations of a globalized world. The International Monetary Fund has also lowered its global economic growth forecasts, titling its report "Global Economy in the Shadow of War."

To navigate this uncertain environment, Kastenholz advises investors to focus on historical constants and adopt a scenario-based approach. Instead of betting on a single outcome, preparation for various possibilities is crucial. This strategy, he explains, helps mitigate the impact of sudden market reversals. LGT's approach to wealth management, he notes, relies on the experience gained by the Princely Family of Liechtenstein over centuries, highlighting that surviving over 900 years of European history is not accidental.

History has experienced a 'reboot' and our neoliberal economic order is undergoing transformation.

— Mika KastenholzDescribing the fundamental shift in global power dynamics and economic structures.

In addition to geopolitical upheavals, societal shifts such as rising wealth inequality and growing distrust in institutions are also contributing to the uncertainty. Kastenholz, based in Hong Kong, points out these evolving societal trends alongside the geopolitical realignments, further complicating the investment landscape.

When a family survives over 900 years of European history, it is not by chance.

— Mika KastenholzHighlighting the long-term experience and stability of LGT's approach.
DistantNews Editorial

Originally published by Le Temps in French. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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