Shifts in trade and national security priorities split globalisation into two tracks, PGIM finds

Globalisation is not retreating but evolving into two distinct tracks, according to new research from PGIM, the global investment management arm of Prudential Financial, Inc. (NYSE: PRU), which manages US$1.38 trillion in assets.

Despite rising geopolitical tensions and increasing trade barriers, most sectors remain integrated through global supply chains, while a smaller but strategically critical segment is sharply deglobalising.

In its latest Megatrends report, A New Era of Globalization, PGIM observes that roughly 75% of the global economy continues to operate within what it calls the “fast track” of globalisation. These sectors benefit from open markets and minimal national security interference.

“Rising geopolitical tensions and expanding trade restrictions may appear to signal the globalisation pendulum has swung hard in the opposite direction, pitting national interests against a shared global good. Yet the reality is far more nuanced,” said Shehriyar Antia, head of Thematic Research at PGIM. “Even if America’s ‘small yard’ of protected industries grows larger, roughly 80% of global trade happens beyond US borders, and companies in most industries will still seek out the benefits of free trade and competitive advantage.”

Investment opportunities

The research identifies investment opportunities even within industries on the decelerating track, including:

1. Artificial intelligence and advanced semiconductors – Market fragmentation is emerging, but companies like TSMC are diversifying regionally.
2. Electric vehicles – Tesla and BYD remain early leaders; BYD is targeting growth in emerging markets and luxury segments.
3. US-Mexico border industrial real estate – Near-shoring is driving demand despite policy uncertainty.
4. Metals and minerals – Long-term copper demand supports growth prospects

The analysis also highlights regions poised to benefit from near-shoring, such as Chile, Peru, Brazil, Australia, India, Vietnam, Poland, Czechia and Morocco.

“Protectionist trade policies and industrial policies are firmly back in fashion and creating real turbulence in global markets,” said Taimur Hyat, PGIM’s chief operating officer. “Over the long term, however, producing goods where they can be made most inexpensively and efficiently remains a compelling force for firms and their investors, making it likely that globalisation will prevail for industries making up the majority of the global economy that do not easily fit into a national security narrative.”

The full report is available at pgim.com/megatrends.

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