NOTHING surprises me anymore. Never in a million years could I have imagined the kidnapping of a foreign leader by American troops in full view of the world. Audacious doesn’t even begin to describe what happened.
Nobody had any idea that the US would dare to invade another sovereign state and seize its president. What we can probably say, however, is that we should not be entirely surprised that US President Donald Trump has “taken” his Venezuelan counterpart Nicolas Maduro by force to America to face trial.
The Trump administration has demonstrated that it is capable of just about anything, regardless of its legality. What is also not surprising is that the US will justify its actions in the name of national security. It is using the same argument for wanting to annex Greenland. The Trump administration has said that it wants to take Greenland “one way or another” before China or Russia does.
Of course, everything can be spun as being in the interest of national security. So, anything that the Trump administration wants to do, no matter how trivial or how serious, can be conveniently argued as being in the interest of national security.
It doesn’t stop with the US.
Any country can do the same. Russia has already done it with its invasion of Ukraine. China has done it with its claims of large swathes of the South China Sea.
At the heart of America’s actions is the forceful expansion of its sphere of influence, otherwise known as American hegemony. This is likely to widen the separation of the world into those who are pro-US and those who support the Chinese view of global order.
Fight for world supremacy
This is a fight for global control by two superpowers. The US is desperate to revive the world supremacy that it once enjoyed after World War II. But its influence has been in steady decline as many countries think that the benefits of being aligned with America have been diluted by the rapid ascent of China on the world stage.
In other words, many countries will be forced to choose between the two. Thankfully, full-scale deglobalisation can be avoided. But global growth could still be lower as a result of the fragmentation of world order.
That said, Asian economies are expected to be resilient in a world where growth could turn out to be moderate. Unlike the US, which will continue to be hampered by lingering uncertainty due to the Trump tariffs, Asia could be supported by tech-driven demand.
Many Asian economies are exposed in some way to the frenzied artificial intelligence-driven capital spending. That should provide a cushion, if not an impetus, for growth in 2026. It should also help to offset some of America’s tariff headwinds.
Cash is king
On the monetary front, many Asian central banks are close to, if not already at, the end of their pre-emptive easing cycles. But rate hikes are unlikely to be on the agenda just yet. Instead, many governments could turn to fiscal measures to support domestic demand.
However, it is unlikely to be plain sailing for many Asian countries. Geopolitics could still be an unsettling concern for many of the region’s governments, as the US and China extend their ambitions for global dominance. The US wants to do it quickly. China is happy to play the long game.
For many companies, being nimble in a fragmented world could be key to their success, if not their survival. So, we should be looking for businesses that can turn on a sixpence. Investors should try to focus on those companies that can generate cash because the availability of cash can quickly turn strategy in the boardroom into action in global markets.
For investors, cash generation will also be vital. With cash, we can easily position our portfolios to capture opportunities as and when they arise. As disruptive as trade wars and fragmentation are, investors should remain focused on cash generation, as cash is king.
Without a steady flow of cash, we can’t easily buy the shares we like without selling some of the assets that we already own and like. But a stream of income through regular and predictable dividends can provide us with options.
From a sectoral perspective, real estate investment trusts with predictable distributions look attractive. Banks, insurers and consumer staples are other sectors that could be well-positioned to weather the turmoil in 2026. Defence companies could be in demand as geopolitical uncertainties continue to prevail.
We can always hope for the best in 2026, but we should also be prepared for the worst. Cash flow will be key. The ability to generate free cash during economic uncertainties can provide businesses with options. A steady stream of cash in the form of dividends can provide us with plenty of lucrative options, too.
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