Fidelity Expects Geopolitical Risk to Be Short-Term Disruption; Global Economic Fundamentals Not Showing Significant Weakening

Fidelity International Fund Manager Zhang Yuxiang stated that geopolitical risks have gradually accumulated over the past few months. The market’s true uncertainty lies in the timing of events and subsequent developments. Based on current information, conflicts are more likely to be short-term disruptions rather than long-term, comprehensive regional confrontations.

From a macro perspective, Zhang Yuxiang believes that the global economic fundamentals have not shown obvious signs of weakening. Corporate earnings and capital expenditure cycles continue, and the policy environment also provides support. Energy prices have risen in the short term due to risk premiums, but with major oil-producing countries adjusting supply in a timely manner, the likelihood of a significant mid-term surge is limited. The current market focus should be on whether supply chain disruptions will persist and further impact inflation and central bank policies.

Regarding investment strategies, Zhang Yuxiang remains optimistic about artificial intelligence (AI) as the most important long-term structural trend. Fidelity prefers hardware with technological barriers and real capacity in related layouts, including semiconductors, advanced chips, and memory supply chains. Software sectors with higher valuations and still undergoing business model validation are approached with caution. Additionally, ongoing attention will be paid to changes in U.S. chip export and certification policies.

Regionally, advantages in valuation and industry structure outside the U.S. are gradually emerging. Asia’s tech manufacturing chains have long-term competitiveness; South Korea is expected to benefit from improved memory cycles and corporate governance, with medium-term growth potential. Some Chinese A-shares in robotics and automation represent manufacturing upgrades; Japan’s value stocks in banking, industrials, and defense industries are attractive amid normalizing inflation and improved capital efficiency.

As for other asset classes, if energy prices deviate significantly from supply and demand fundamentals, downside risks should be monitored. Gold continues to serve as a diversification and hedging tool supported by ongoing net purchases by global central banks. Copper is more suitable for long-term participation through cost-advantaged mining companies, supporting electrification and AI infrastructure demands.

In summary, Zhang Yuxiang believes that geopolitical risks cause short-term volatility rather than changing long-term trends. Through disciplined and diversified allocations, controlling downside risks while maintaining growth participation will help navigate uncertain environments steadily. As the situation gradually clarifies, themes with structural growth momentum are expected to return to market focus.