Why Davos has investors rethinking geopolitics, AI and South Africa

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JEREMY MAGGS: The World Economic Forum (WEF) in Davos is buzzing, but three forces are cutting through the noise right now: geopolitics – with Donald Trump speaking, and Greenland dominating, I would imagine, corridor chatter – artificial intelligence reshaping capital flows faster than policy can keep up, and also a renewed question over where Africa and South Africa fit into global portfolios.

Let’s discuss where investors – where the smart money – is looking.

I’m joined by Chris Holdsworth, chief investment strategist at Investec. Chris, welcome. Greenland, I think it’s fair to say, has become the unexpected headline at Davos this week. What is it telling you about how geopolitics is being priced by markets right now?

CHRIS HOLDSWORTH: Yeah, Jeremy, I think that’s exactly the story. The Greenland story is dominating everything at the moment. President Trump is due to speak today. I think the underlying story is the market reaction.

We heard from senior representatives from Canada, from China, from Europe, all pleading for a rules-based order and for a return to how things were prior to April last year.

Read:
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With all this uncertainty, we saw a sell-off in the market yesterday, as expected. What was unusual is that the dollar weakened and Treasury yields went up.

The US is not acting like the safe haven that it did before and that’s a problem for investors.

We don’t have that bucket being an effective safe haven in the same way that it did before.

We have to find other alternatives or we’re all going to be shifted up the risk curve. I think that’s going to be the key talking point for markets as a result of this for the next six months, or at least.

JEREMY MAGGS: Chris, is there a sense that we’re starting now, then, to see a move from rules-based, as you put it, globalisation to more power-based deal-making? Obviously, if that’s the case, it’s going to change risk modelling.

CHRIS HOLDSWORTH: That’s exactly what’s happening. It’s certainly the talk. You talk to a lot of foreign investors around on the streets, and the sentiment you’ve described is exactly the sentiment that’s repeated on the streets. I think it’s a broad-based concern at this point.

JEREMY MAGGS: When you talk about a broad-based concern, are you — it’s a cheap question always — but the mood this year perhaps compared to previous years, is it more sombre? Is there a great deal more seriousness not only in the formal conversations on the stages, but on the sidelines?

CHRIS HOLDSWORTH: I think it’s a combination of anxiety and frustration. Anxiety, because we’re not sure what President Trump is going to say and the associated concerns around the market reaction, but also frustration, because there are a lot of other things that are happening here.

Read: Trump doubts Greenland threats will spoil Europe trade deal

There are a lot of other stories that are simply being pushed into the sidelines, because the Greenland story is dominating absolutely everything at the moment.

JEREMY MAGGS: In this environment then, Chris Holdsworth, which assets or regions become geopolitical hedges rather than growth plays? In other words, how is the economic landscape shifting in the short to medium term?

CHRIS HOLDSWORTH: This is an opportunity for some of the second-tier safe havens. A country like Japan is an example, which traditionally has been a safe haven asset, it hasn’t been of late but it could well pick up that mantle again.

This is obviously an opportunity for a country like Switzerland, which has been a traditional safe haven, and other countries that are on the edge may well have a chance here, but I don’t think anybody is going to fully be able to replace what we had from the US up until April last year.

JEREMY MAGGS: So that’s the big geopolitical issue. The other one is artificial intelligence. I would imagine it’s everywhere at the World Economic Forum. What is the general sense from the investment community, Chris? Are they treating AI as an infrastructure rather than just a tech theme, which was maybe the case a year or two ago?

CHRIS HOLDSWORTH: I think we’re getting to the point where there’s increasing concern around the speed at which AI is being developed.

I attended a talk yesterday around how AI can be used by hackers and how it raises information security issues, and there are concerns around what it means for employment going forward.

I think the narrative has shifted a little bit from optimism last year around the potential benefits for society to now being what could the knock-on consequences be?

Read: Why 2026 will reward discipline, not drama

Maybe this is just a reflection of the anxiety around Greenland, but it does seem like the narrative is shifting away from optimism to pessimism in general.

JEREMY MAGGS: Well, let’s talk about those knock-on effects. There’s a sense as well, I imagine, that AI would deepen the gap between capital-rich countries and emerging markets such as ours. Or, more optimistically, Chris, do you think that there is an opportunity that it might just level the playing field?

CHRIS HOLDSWORTH: The general view from the people I’ve been speaking to here is that it’s going to heighten inequality.

There might be universal basic income grants, but they’ll be different across countries, and even in the countries that they are deployed, we’re going to end up with people who own assets who inevitably will be much wealthier than the people who don’t.

Read:
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The inequality issue is coming up a lot. Maybe it’s premature, but I think the general view is that it’s going to be a more unequal society going forward.

JEREMY MAGGS: If that’s the case, what’s the sense then about the AI winners emerging? Is it productivity? Is it defence? Energy? Health? Data? Where is the needle moving?

CHRIS HOLDSWORTH: It’s everything. Every single sector that you have some interaction with here is talking about AI, and how AI is going to improve or threaten their industry. So it’s across the board.

JEREMY MAGGS: Let’s turn to Africa. I did mention that at the start of our conversation. The biggest misconception that global investors are still bringing to the continent. Chris Holdsworth, has the conversation, has the perception changed in any way?

CHRIS HOLDSWORTH: Yes, I think so. There’s actually been a lot of optimism about Africa in particular.

There have been quite a few talks about the African Continental Free Trade Agreement (AfCFTA) and how it’s taken five years to get the paperwork done. Now they’re on the hard work of improving logistics.

Listen/read: Slowing global trade, yet Africa’s integration opportunity grows

We’ve chatted to logistics companies which are keen to do that work. There’s talk about improving the cross-border exchanges, or the places where you cross over the border, and helping with currency exchanges too.

Listen/read:
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There is a lot of work being done.

You chat to some of the guys here around the potential for growth, and Africa grows at 3.5% at the moment, the people we were chatting to say that could go to 5% to 7% if you get this right.

In a global environment where there’s a lot of anxiety and concerns around low growth, I think there’s more and more attention being placed on the opportunities that Africa provides.

JEREMY MAGGS: That’s the continent. What about South Africa then? Is it being priced as a risk, or maybe something which is cheaper with a little bit of upside if the global cycle turns?

CHRIS HOLDSWORTH: I think there’s still quite a bit of scepticism about the South African recovery story, despite the data.

But what’s interesting is there’s been a lot of interest in SA.

I was at the South African dinner last night; it was two times oversubscribed. I spent quite a bit of time at SA House, the place that the South African delegation rents out, regularly there have been over the maximum number of people allowed in the room.

Read: Outlook 2026: South Africa is back on the radar

I don’t know if it translates to investment, but there’s certainly a lot of interest in SA at this point.

JEREMY MAGGS: What are they looking for then? Is it the broad political landscape, a little bit more stability when it comes to power and water? Is there more reform momentum that they’re looking at, or a combination of all of it?

CHRIS HOLDSWORTH: I think it is a combination. I think investors have been surprised by the extent to which we have seen successful reform, if you think of electricity and ports as an example, and they’re just looking to see a bit more of it.

Listen/read: Trump actions ironically good for SA

Another six months or 12 months of providing delivery like that and I think we’re going to see investors taking the SA growth story quite seriously.

JEREMY MAGGS: So just a final question then. If you had to tell investors one thing to watch over the next 12 months that might surprise them about the continent or even this country, what’s the message that you’re going to take back?

CHRIS HOLDSWORTH: On the continent, it would be just watch out for foreign interest, which up until now has been quite muted. And on the first point we spoke about, geopolitics, watch out for the Japanese 10-year bond yield because it could provide an alternative to treasuries.

JEREMY MAGGS: Chris Holdsworth, chief investment strategist, Investec, talking to me from Davos in Switzerland. Thank you very much indeed.

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