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Venezuela, From the Richest Country in Latin America to a Collapsing Economy

WIKIPEDIA — Wikimedia CommonsNicolás Maduro, President of Venezuela

The oil boom positioned Venezuela as one of the richest countries in the world between the 1950s and 1980s. Today, it resembles a post-war economy. What happened? A combination of factors brought to its knees what was once one of the greatest Latin American powers, leading to the most recent milestone: the capture of the—controversial—Venezuelan president, Nicolás Maduro, by the United States. Now, global and Latin American investors are closely watching the evolution of this story, which features an economy that the financial market sees as “on pause” and that has generated a diaspora of 7.9 million people.

According to figures from the World Economic Forum in Davos, Venezuela once ranked as the fourth nation with the highest GDP per capita in the world, alongside France. The country was nicknamed “Saudi Venezuela” and “The Millionaire of the Americas,” and not without reason. To this day, it holds the largest proven oil reserves on the planet, with around 303 billion barrels of the hydrocarbon, according to OPEC figures updated as of June last year.

Oil wealth, for example, made gasoline in Venezuela still considered the cheapest in the world, thanks to massive government subsidies. It is practically given away, since a liter of gasoline in Venezuela costs 0.097 centimos of a bolívar at current prices—a figure so low that currency converters do not even register it, showing an absolute zero in parity with the U.S. dollar.

However, this oil wealth created a rentier economy, nearly 100% dependent on oil, which collapsed due to two factors that explain the current situation. One is the drop in international oil prices in the 1980s. The other is the rise to power, through democratic means, of Hugo Chávez, who later centralized the economy and dismantled the checks and balances that allowed him to accumulate power and impose a statist economic model.

In this article, we will focus only on the first point.

The collapse of Venezuela

According to data from the International Monetary Fund (IMF), Venezuela’s GDP in 2024 stood at $82 billion, with three consecutive years of growth (8% in 2022, 4.4% in 2023, and 5.3% in 2024). These may seem like very positive figures, but they hide a devastating reality.

The same data show that Venezuela’s GDP in 2012 reached a historic peak of $372 billion. In other words, the most recently known GDP is 78% below the highest in the country’s history. Only European countries and Japan during World War II have seen such a sharp decline in GDP, yet Venezuela did not experience even an internal armed conflict during this period, despite its political instability.

IMF economists warned that, when measured between 2013 and 2020, Venezuela’s GDP fell by 88%, surpassing by three years the duration of the U.S. collapse during the Great Depression. There is no similar precedent.

And while the country was “swimming” in cheap gasoline, hyperinflation took a massive toll that contributed to the current devastation.

In 2018, hyperinflation reached a historic figure of 130,000%, which moderated to “only” 548% in 2024 and may have dropped to just over 300% last year, thanks to orthodox “neoliberal” monetary policies such as reducing public spending and lifting currency controls, along with a de facto dollarization.

However, the damage is done. A decade of ongoing hyperinflation (from 2014 to 2024) led to the most dramatic erosion of purchasing power ever seen in modern times. IMF figures indicate that between 1998 and 2018, the Venezuelan currency lost 99.999997% of its value.

But perhaps the economic collapse could have been avoided or mitigated if the country, with its immense oil wealth, had properly managed that bonanza. The problem, many voices from the economic front argue, is that statist public policies turned the Venezuelan oil industry into one of the most inefficient in the world.

The Erosion of Oil Production
OPEC data show that between 2008 and 2013, Venezuela’s oil production averaged 2.8 million barrels per day, before collapsing to 337,000 barrels in 2020 and recovering to 921,000 in 2024. Even so, the most recently known annual figure is still 67% lower than during the period when the country was considered one of the world’s top oil producers.

Venezuela’s oil paradox is dramatic. Despite being the country with the largest proven oil reserves in the world, it ranks between 20th and 22nd among oil-producing nations. This is due to investment in the industry collapsing by more than 80% starting in 2003—one year after the attempted coup against President Hugo Chávez, who in response purged the top ranks of the state oil company PDVSA and virtually shut the industry off to new investment. The argument was that the country’s oil wealth required nothing more than state regulation.

In conclusion, Venezuela’s economic collapse is now the most dramatic for any country in modern history without a war.

Analyses indicate that the maximum 88% decline in Venezuela’s GDP surpasses the U.S. collapse during the Great Depression, the shock of World War II, and even exceeds the 70% economic collapse experienced by Syria during its civil war in the last century and the 62% GDP drop in that Middle Eastern country during its more recent internal conflict.

According to economists who have studied this phenomenon, there are three main causes that explain it all—unfortunately tied to political decisions: the destruction of property rights, resource plundering, and destructive economic policies even during times of economic boom.

And the worst part is that the solution for this country, despite its oil wealth, is not just around the corner. Recovery—with the right economic policies—is estimated to take about 20 to 30 years, especially considering that in the last five years Venezuela lost its greatest wealth, and that of any country: 25% of its population.

In Its Own World, Yet Within the Region
After more than a decade of economic crisis, Venezuela is relatively isolated from other Latin American countries, living its own reality with its own market distortions. But the country that was once one of the region’s main powers does not go unnoticed.

Just a few months ago, one advantage market players saw for Latin American investments was a relative geopolitical calm that other regions couldn’t boast. With the situation evolving, it is difficult to know what direction the oil-producing country will take and what implications it may have on the global—and Latin American—stage, especially if tensions escalate with China and Russia, two major allies of the Chavista regime. In any case, investors will be watching developments closely.

The economic connections of neighboring countries with Venezuela have diminished over the years, and there is a perception that it is a market “on pause,” both in terms of foreign investment and international trade. However, the country maintains commercial ties with several of the region’s major economies.

Figures from the Observatory of Economic Complexity (OEC) show that the country’s main partners in the region are Brazil and Colombia. In recent years—the latest data from the organization is from 2023—Brazil ranked as the fourth-largest buyer of Venezuelan exports (after the U.S., China, and Spain) and the third-largest seller to that market. Colombia, another neighboring country, ranks second among Latin American countries in both categories, and Ecuador is the third-largest buyer of Venezuelan exports in the region. All these markets, however, represent only single-digit shares of Venezuela’s foreign trade.

Unlike the U.S. and Spain, which primarily purchase crude oil, and China, which favors petroleum coke, according to the OEC, the Latin American countries that buy the most Venezuelan products mainly purchase nitrogen-based fertilizers and, in the case of Ecuador, unstuffed frozen fish.

Millions of Expatriates Watching From Abroad
Another strong link between Venezuela and the rest of the region is the massive diaspora that has settled in other Latin American countries. Millions have left the country over the past 15 years, fleeing a collapsed economy in search of opportunities in more stable nations in the region, especially neighboring ones. Many of these individuals leave to find work and send remittances back to Venezuela, injecting some capital into struggling local households.

Venezuelan migration, which accelerated after 2014, has expanded across the continent. According to UNHCR, the United Nations refugee agency, around 7.9 million people have left the country in search of opportunities, with 6.7 million settling in other Latin American and Caribbean countries.

The most popular destinations for Venezuelan migrants are Colombia and Peru, with 2.8 million and 1.7 million Venezuelan citizens, respectively, according to data from the Inter-Agency Coordination Platform for Refugees and Migrants (R4V), an initiative led by UNHCR and the International Organization for Migration (IOM). They are followed by Brazil, with about 626,900 Venezuelans; the U.S., with 545,200; and Chile, with 532,700.

Maduro’s Arrest: For Now, Attention Remains on Market Fundamentals

| By Marta Rodriguez | 0 Comentarios

The arrest of Nicolás Maduro by the United States adds a new focal point to global geopolitics. The detention “confirms the idea that there are no zero-probability events: all scenarios become possible once the rules no longer exist,” explains Philippe Waechter, Chief Economist at Ostrum (an affiliate of Natixis IM). According to the expert, the key question now will revolve around Russia and China’s responses, both of which support Maduro. Waechter recalls that the United States and Venezuela have had tension since Hugo Chávez came to power in Venezuela in the late 1990s. Previously, the country was a U.S. “preserve,” specifically through oil and chemical industry exploitation. “As a reflection of this, baseball is the country’s favorite sport, just as it is in the United States,” he notes.

Waechter now emphasizes that the United States under President Donald Trump “wants to get its hands on Venezuelan oil.” While it is low-quality crude, it represents 17.5% of global reserves, “the largest in the world.” For this reason, and given the White House’s strong pro-oil bias, combined with the stagnation of the U.S. shale oil exploration and production industry, “Venezuela is a good alternative,” according to the expert.

In conclusion, Waechter points out that if the United States takes control of Venezuela, “sanctions on oil exports would be lifted and crude production in the country would resume, thereby increasing oil supply in the global market.” This would therefore be a favorable factor for a decline in the price of black gold. However, “the final question is whether, once again, an intervention of this kind will be destabilizing for the region. There is no shortage of examples,” adds the Ostrum expert.

Oil takes center stage

This geopolitical event therefore brings oil back into the spotlight. Energy prices reacted lower in the first relevant session following the arrest of Nicolás Maduro: oil fell by around 1% and natural gas dropped nearly 4%, “a move that draws attention given the geopolitical context, but which the market is reading, for now, as a political event with no immediate physical impact,” explains Diego Albuja, ATFX LATAM market analyst.

The expert adds that the key driver behind price movements in major energy commodities is the fact that no production disruptions or damage to Venezuelan oil infrastructure have been reported. As a result, “without a real supply shock, the geopolitical risk premium quickly fades and prices return to responding to global market fundamentals.” He notes that the market is looking more toward the medium term, potential political changes and normalization scenarios, rather than an immediate impact on crude flows. The sharper drop in natural gas prices is mainly due to factors specific to the U.S. market, such as high storage levels, more benign weather expectations, and technical adjustments in speculative positions, rather than the situation in Venezuela.

“The market is sending a very clear message: as long as there is no real supply disruption, fundamentals prevail. However, this balance is fragile and can change quickly if signs of operational damage, logistical blockages, or abrupt changes in the sanctions regime emerge,” Albuja concludes.

From his perspective, Raphaël Thuin, Head of Capital Markets Strategies at Tikehau Capital, notes that in recent years investors and markets have learned to look beyond recurring geopolitical risks and focus on the fundamental factors that drive long-term market performance. Recent developments in Venezuela “appear to fit this pattern,” as the country’s global economic impact “remains limited, with relatively low exposure for most international companies.”

As a result, the expert considers it likely that long-term market prospects “will not be affected.” He also does not rule out the possibility of positive catalysts. For example, he notes that one of the objectives of the current U.S. administration is to facilitate the flow of more Venezuelan oil to global markets. That said, Thuin acknowledges that geopolitical and regime changes “inevitably introduce new uncertainties,” and therefore concedes that in 2026, as in 2025, “geopolitics will be a factor investors and market performance will need to take into account.”

Other assets: gold and equities

While oil is now in the spotlight, there may be other spillover effects. For example, Ned Naylor-Leyland, Investment Manager for Gold and Silver at Jupiter AM, points out that precious metals, in this environment of market volatility, geopolitical tensions, and macroeconomic uncertainty, once again reinforce their historic role as a store of value, behaving differently from equities and bonds. Gold has already surpassed the $4,400-per-ounce level, rising by around 2% amid the arrest of Nicolás Maduro.

Similarly, Javier Molina, Senior Market Analyst at eToro, says that the situation in Venezuela “adds immediate noise.” While the expert places emphasis on the oil market, he also adds that these types of episodes “tend to result in tactical moves and spikes in volatility, but rarely alter the structural trend of risk assets on their own.” Ultimately, it serves as a reminder that the short term “can be uncomfortable, even within a bullish cycle.”

Currently, Molina stresses that the underlying trend remains upward and that staying invested “continues to make sense, especially in companies with visible earnings and positive momentum.” However, he acknowledges that “this is no longer a market for complacency,” as geopolitics, the fragility of the macroeconomic cycle, and high concentration levels “require heightened risk management, position-size adjustments, and acceptance that volatility is part of the journey.” For now, and ahead of the opening of U.S. equity markets, European stock indices were trading slightly higher by mid-session.

Can Bitcoin Be Considered a Reliable Measure of Market Liquidity?

| By Marta Rodriguez | 0 Comentarios

For many experts, there is a strong correlation between Bitcoin and digital assets with global liquidity. According to Yves Bonzon, CIO of Julius Baer, we are facing one of the “most liquidity-sensitive segments in financial markets,” which has led some analysts to interpret the cryptocurrency’s price drop as an early warning of monetary contraction. In his latest analysis, Bonzon raises this debate by posing fundamental questions.

Have investors found the key to measuring liquidity fluctuations in the financial system?

Bonzon points out that recent market dynamics have intensified these questions. He recalls that recently, U.S. stocks experienced a sharp intraday drop after the initial rally triggered by Nvidia’s results was unwound. Although this type of movement is uncommon, he emphasizes that “they are usually followed by strong rebounds.”

In the digital asset space, Bitcoin has entered a marked bearish phase: “It has experienced a sustained downtrend, falling more than 30% from its recent peak.” The price evolution, along with its decoupling from gold, has reopened the debate about its ability to act as a digital equivalent of the precious metal. Bonzon insists that investors must differentiate between short- and long-term correlations, as in the short term the relationship can fluctuate from “significantly positive to significantly negative,” a behavior that intensifies when Bitcoin “trades like a high-beta technology stock” during periods of excessive leverage or deleveraging.

In the long term, however, the CIO asserts that both gold and Bitcoin will tend to move “largely in tandem” as long as Western governments continue to use capital markets for sanctions, an environment that favors “greater structural demand for external assets that hedge against the consequences of such actions.”

Bonzon adds that although Bitcoin and digital assets are among the most sensitive segments to global liquidity, it does not necessarily make the cryptocurrency a reliable leading indicator. He explains that its relatively short history already shows a recognizable pattern: after its halving events, it tends to enter a sustained consolidation phase. Despite this, and in the context of the firm’s Secular Outlook, Julius Baer continues to consider Bitcoin “a viable long-term hedge against fiscal dominance and fiat currency devaluation.”

NVIDIA earnings trigger a rollercoaster in U.S. stock markets

The report contextualizes the recent behavior of traditional markets. U.S. stocks recently suffered an exceptionally volatile session: after a start driven by Nvidia’s results, the S&P 500 “opened more than 1% higher,” only to experience “a massive intraday reversal” and close in negative territory.

The Nasdaq 100 experienced an even more extreme move, with “an unusually wide intraday trading range of more than 4%.” These are very uncommon episodes: “Since 2000, only eight such episodes have occurred,” Bonzon recalls. However, all of them have historically been followed by average rebounds of 16% in the 100 days afterward. Since that session, both benchmark indices have recorded three consecutive days of recovery.

Other indicators also showed signs of stability, such as the NYSE Securities Broker/Dealer Index, which recently rebounded at its 200-day moving average, and the VIX, which, according to the expert, has calmed, trading only slightly above its long-term average of 20.

In fixed income markets, Bonzon notes that the Merrill Lynch Option Volatility Estimate (MOVE) Index, which reflects implied volatility in the U.S. Treasury market, “is behaving well,” staying below 80 points. He also notes that neither nominal nor real U.S. Treasury yields have shown significant movements in recent sessions, while inflation expectations remain stable. A similar stability is observed in the U.S. dollar index, which remains around 100 points, and in gold prices, which continue moving sideways within a range of $4,000 to $4,200 per ounce.

Digital gold or Nasdaq on steroids?

Regarding Bitcoin, Bonzon details that the cryptocurrency “has lost more than 30% of its value from its previous all-time high in early October,” after touching a provisional low of $80,553. At the same time, Bitcoin ETFs are heading toward a record month of outflows.

The CIO mentions that in a recent Financial Times opinion piece titled “The Warning Signal from Bitcoin’s Drop,” Katie Martin wrote that the evolution of Bitcoin and digital asset prices in general is becoming an early warning that markets feel unstable, giving investors, especially leveraged ones, an early signal of liquidity contraction.

The divergence between gold and Bitcoin has led some analysts to conclude that the cryptocurrency is not really digital gold. But Bonzon qualifies that statement as potentially premature: gold investors usually operate without leverage, while a large portion of Bitcoin investors, especially retail, do use leverage. This mismatch explains why, in certain periods, “investing in Bitcoin resembles investing in high-beta IT stocks.”

He also warns that the theory of Bitcoin as a leading liquidity indicator has limits: “If Bitcoin became the new U.S. liquidity indicator followed by everyone, the signal would stop working.”

The argument for long-term co-movement between gold and its digital equivalent remains valid

During his recent trip to Singapore and Hong Kong, Bonzon received numerous questions about the crypto market’s future. He notes that despite the asset’s short history, there is “a distinctive pattern” that usually repeats after each halving, marking the start of “a sustained consolidation phase.”

In the long term, Bonzon expects both gold and Bitcoin “to continue rising as long as Western governments keep instrumentalizing their capital markets for sanctions.” This dynamic would extend the structural demand for external assets that protect against geopolitical intervention.

As a tail risk, the CIO warns that a potential peace agreement in Ukraine that includes the unfreezing of Russian assets could trigger a “sudden profit-taking” in off-system assets.

In the coming months, the high correlation between Bitcoin and U.S. tech stocks is expected to decrease, as it is a phenomenon linked to the current phase of stock market consolidation. Meanwhile, sentiment indicators are “in depressed territory,” and overbought/oversold indicators point to “advanced selling pressure,” leaving room for short-term rebounds.

Structurally, Bonzon states: “Bitcoin should continue to be the original ‘native token,’ the only digital asset capable, in principle, of fulfilling the function of digital gold.” However, he rules out replacing fiat currencies, as it is “embedded in a deflationary monetary system by design and therefore suboptimal as a medium of exchange.”

Nevertheless, Julius Baer maintains its central thesis: “We continue to consider Bitcoin a viable long-term hedge against fiscal dominance and fiat currency devaluation.” The CIO concludes by noting that the next halving is scheduled for mid-2028.

Private Asset ETFs: Key Insights Into a Rapidly Growing Strategy

| By Marta Rodriguez | 0 Comentarios

A new wave of ETFs investing in private markets has made headlines over the past year. The sector is still in its early stages but evolving rapidly. The structure bundles traditionally illiquid assets into a historically liquid vehicle. Based on recent work with asset managers exploring these options, Brown Brothers Harriman (BBH) has developed a guide analyzing the factors driving the product’s evolution, as well as the opportunities, challenges, limitations, and risks it presents.

What Are Private Market ETFs and Why Are They in the Spotlight?

Unlike most listed assets, private markets, such as private equity, private debt, or private real estate, are typically illiquid. By nature, they are owned by a small group of investors, can be harder to trade, and are usually valued infrequently, often quarterly.

ETFs, in contrast, trade intraday and generally contain listed securities that are also traded throughout the day. By packaging private market assets into an ETF, investors gain exposure to an investment that is traditionally illiquid, costly, and long-term, in a more accessible way.

U.S.-domiciled ETFs are subject to regulatory liquidity requirements that limit investment in illiquid assets to no more than 15% of the fund’s net asset value.

Overall, private markets and ETFs represent two of the fastest-growing areas in the investment sector, consistently capturing an increasing share of capital flows for over a decade.

As an example, BBH cites a survey of private market investors conducted this year, which revealed strong investor confidence: of 500 global investors surveyed, 34% planned to invest in private market ETFs, and 57% sought more information about these products.

Market Context and Growth Drivers

The private market investment landscape is rapidly expanding and converging with another sector megatrend: ETFs.

Growth of Private Markets: Private assets currently represent over $14.8 trillion in committed and deployed capital, projected to reach $20–25 trillion by 2030. Additionally, the number of U.S. public companies has declined by roughly 50% since the 1980s, making private assets a key, often untapped, opportunity for investors historically excluded from these asset classes.
ETF Boom: The U.S. ETF market reached a total net asset value of $11.8 trillion in July 2025, with over 460 new ETFs launched in just the first half of the year, including Apollo’s and State Street Global Advisors’ first public-private credit ETFs.
Retail Access: Historically, retail investors had limited pathways to invest in private assets. Most products were targeted at institutional or high-net-worth investors. ETFs that hold private assets offer everyday investors a means to access private markets, often with minimums as low as a single share.

Several existing ETFs already emphasize connections with alternative and private market investments. Many are innovative, successful, and provide exposure, often indirect, to private assets. However, terminology is important, and BBH defines a private market ETF as one that directly holds private assets, such as private companies, private debt, or private real estate. This includes ETFs holding private companies either directly (e.g., AGIX’s investments in xAI or Anthropic) or via a special purpose vehicle (SPV).

BBH notes that ETFs do not qualify as private market ETFs when:

Alternative vs. Private Markets: “Alternative” is a broader term encompassing a wide variety of investments, including hedge funds. These strategies typically invest mainly in listed securities within a private fund vehicle.
ETFs holding publicly traded investment managers whose main activity is investing in private markets (e.g., Blackstone, Brookfield, Apollo, KKR). These funds invest in listed securities that indirectly gain exposure to private markets through the ongoing business activities of the companies they own.
ETFs invest in listed vehicles, such as business development companies (BDCs), which lend to or hold stakes in private companies.

BBH emphasizes that details matter for understanding regulatory restrictions, operational mechanisms, NAV calculations, valuations, and any relevant discussion regarding potential returns, liquidity, and risk.

Operational Mechanics of Private Market ETFs

Any ETF investing in private assets requires a well-designed valuation policy to manage daily market fluctuations, with triggers specifying when and how private asset holdings should be revalued.

Given the 15% exposure limit to private assets, investment managers must continuously monitor the mix of public and private market assets. Intraday movements in public markets can alter the fund’s overall allocation, so managers need a plan to rebalance the fund accordingly.

New Products on the Market

Recently, two ETFs have launched with an innovative approach: the IG Public & Private Credit ETF (PRIV) and the Short Duration IG Public & Private Credit ETF, both designed to provide greater exposure to private credit.

To achieve this, these ETFs have partnered with Apollo to provide firm, executable intraday offers on the portfolio via a guaranteed capital line backed by Apollo. This mechanism offers reasonable certainty that Apollo will provide liquidity if daily redemptions need to be funded, even for underlying private credit portfolios that would otherwise be difficult or impossible to liquidate during lock-up periods.

Conclusion

ETFs represent an opportunity for both managers and investors. Investment managers can expand distribution and access to private markets while offering broader exposure to a historically illiquid asset class.

Investors can view this from two perspectives:

Institutional investors may view private market ETFs as a means to access the asset class more efficiently, with significantly fewer liquidity obligations.
Retail investors, historically excluded from these assets, now have a pathway to participate in private market investments.

Regardless of product design, the existing 15% limit results in limited exposure to private assets. However, the current administration appears willing to reconsider many related regulations. In August, the SEC removed the 15% limit for registered closed-end funds investing in private funds.

“This is welcome news for the fund community and is likely to drive increased demand for such funds,” the BBH report notes, adding that it also serves as “a potential signal of the administration’s intent to increase access to alternative assets, which could foreshadow future developments in the ETF space.”

Welcome to 2026: What the New Year Holds for Investors

| By Marta Rodriguez | 0 Comentarios

After a year dominated by geopolitical headlines and economic uncertainty, and marked by U.S. tariffs, asset managers are looking ahead to 2026 with cautious optimism. Overall, investment firms suggest that the U.S. economy will remain solid while Europe’s outlook improves, supported by market-friendly monetary policies from major central banks. Together, these factors should create an environment rich in opportunities, but one that also calls for a stronger emphasis on diversification.

When assessing the economic outlook, Anthony Willis, Senior Economist at Columbia Threadneedle Investments, expects solid growth in 2026. “We anticipate a rebound in activity in some European economies, with Germany particularly well-positioned thanks to the stimulus measures announced. China is expected to maintain its growth target at around 5%, while U.S. expansion should be broadly in line with this year. The UK’s growth prospects remain modest and not significantly different from those in 2025, although there is some scope for a slight deterioration,” Willis notes.

A Question of Resilience

“The global economy is undergoing a transition, not a slowdown. Global growth will moderate in 2026 but remain resilient as long as the economic cycle continues, driven by innovation and supportive economic policies. The technology wave is reshaping a multipolar world in which geopolitical and inflation risks have become more structural. These factors add to concerns stemming from fiscal vulnerabilities and valuation excesses, but AI-driven capital investment, shifts in industrial policy, and monetary easing should support activity and extend the cycle,” Amundi states.

Christian Schulz, Chief Economist at Allianz Gl, points out that “the global economy enters 2026 still constrained by the aftermath of trade wars,” with growth expected to ease only slightly to around 2.7%. The investment cycle driven by artificial intelligence, combined with proactive economic policies, will act as a stabilizing force. According to Schulz, “inflation in the United States will rise back above 3%, while pressures in Europe and Asia will be more contained, opening the door to interest rate cuts.”

He adds that 2026 will test institutional resilience, policy flexibility, and the ability to adapt to a more fragmented world. “Investors will need to pay attention to technological advances that will broaden investment opportunities beyond the U.S. technology sector and parts of Asia. Combined with more flexible monetary and fiscal policies, these factors should support global resilience despite challenges to pillars such as central bank independence and free trade,” he concludes.

“Although current market prices reflect a Goldilocks scenario, growth with contained inflation, we believe this is the least likely outcome for 2026. That said, markets may remain anchored to this optimistic assumption until labor market data show clear signs of stabilization. Ultimately, the combination of negative real rates globally, looser credit conditions, and a shift toward more expansionary monetary policies in an environment of still-persistent inflation suggests that inflationary growth is the most likely scenario for 2026. Overall, 2026 should offer investors significant opportunities, provided they are prepared to adapt to a wide range of outcomes, from limited recession risk to episodes of stagflation,” argue John Butler and Eoin O’Callaghan, macro strategists at Wellington Management.

Diversification in the Face of Challenges

Although geopolitical risks remain elevated, Schulz highlights that “attempts at de-escalation in the Middle East represent a positive development.” The United States and China will continue to lead the AI revolution, with spillover effects accelerating in other regions. Valuations in technology and certain less-regulated financial activities warrant caution, but “lower interest rates and moderate private-sector leverage reduce the risk of systemic instability.”

For DWS, the outlook for 2026 appears attractive, although the margin for error remains narrow. “Political headlines and geopolitical risks could trigger heightened volatility at any time. For this reason, a broadly diversified investment strategy, across both regions and asset classes, can help investors seize opportunities while remaining prepared for potential setbacks,” the firm adds.

This view on the importance of diversification is also shared by Amundi, which believes that long-term structural changes will continue to clash with short-term dynamics, keeping risk levels elevated while also reshaping opportunities as governments and companies seek to preserve trade and investment flows. “Our stance for 2026 is moderately constructive on risk assets, with greater diversification at all levels and a range of strategic hedges, such as alternative assets, gold, and selected currencies,” the firm concludes.

Over Five Million New Millionaires Worldwide by 2029

| By Amaya Uriarte | 0 Comentarios

Average Wealth per Adult Will Continue to Grow Over the Next Five Years, with the United States as the main driver of this expansion, followed by the China region, Latin America, and Oceania, according to the UBS Global Wealth Report 2025. Europe and Southeast Asia are expected to experience solid but more moderate growth, while the Middle East and Africa will remain stable or see slight increases.

According to the latest report from the institution, total personal wealth is expected to show particularly dynamic behavior, with annual growth close to 5% in North America and approximately half that pace in the Middle East and Africa. The momentum will come mainly from rising asset prices and value creation associated with technological innovation in a context of structural transformation.

In this scenario, it is estimated that by 2029 there will be more than five million new millionaires worldwide. This trend will be reflected in the majority of the 56 markets analyzed, with no distinction between developed or emerging economies, large or small, dynamic or stagnant.

One of the Most Striking Findings of the Study Is That the Evolution of Wealth Does Not Always Move in Parallel With Economic Growth. At Times, It Far Outpaces It; at Others, It Lags Behind. Even Within Regions Showing Strong Macroeconomic Performance, There Can Be Areas Where Wealth Accumulation Is Weak or Stagnant.

Added to this is the fact that asset prices do not necessarily follow the same trajectory as GDP, and that the private sector—where individual wealth is concentrated—does not move at the same pace as the public sector, which is particularly relevant in economies where the latter holds considerable weight.

Another Key Factor Going Forward Will Be the Individual Mobility of Wealth, Driven by Intergenerational Transfers. In This Regard, the Size of the Population or Economy Is Not the Only Thing That Matters: Some Smaller Countries Could Surpass Much Larger Nations in Transfer Volume, Even When Demographic Projections Would Suggest Otherwise.

UBS Concludes That, While These Scenarios Are Subject to Multiple Factors and Could Evolve in Various Ways, the Initial Signs of Growth Already Observed Provide a Solid Foundation for Reflecting on the Path That Global Wealth Will Take in the Coming Years.

New York Life Appoints Joao Magallanes Canals as Wealth Management Executive

| By Amaya Uriarte | 0 Comentarios

New York Life has appointed Joao Magallanes Canals as Wealth Management Executive for its Boston Atlantic General Office, with the goal of strengthening its value proposition in wealth management for high-net-worth clients in the United States. Joao Magallanes, an economist with a degree from Universidad del Pacífico (Lima, Peru) and a Level II candidate in the CFA Program, brings nearly a decade of experience in wealth management and capital markets.

“Joao’s appointment enhances our ability to serve families and entrepreneurs with sophisticated wealth management and planning needs. His analytical rigor, market knowledge, and client-centric approach align perfectly with New York Life’s culture,” stated representatives from the Boston Atlantic General Office.

For his part, Joao Magallanes Canals noted: “I am excited to contribute my experience in portfolio structuring across multiple banking institutions, in tailored investment solutions, and in intergenerational planning to help our clients preserve, grow, and transfer their wealth with discipline and purpose.”

Extensive Experience

He began his career in the Market Risk division at Banco de Crédito del Perú (BCP), later joining the Fixed Income and FX Desk at Credicorp Capital Bolsa. He subsequently moved to BCP’s Private Banking division and was later promoted within Credicorp Capital from Senior Analyst to Investment Advisor. Both BCP and Credicorp Capital are part of Credicorp Ltd., the leading financial holding company in Peru. After consolidating his experience within the group, he joined SURA Investments, part of the Colombian conglomerate Grupo SURA, where he served as a Private Banker, advising high-net-worth clients on global investment strategies.

Throughout his career, Joao, who is trilingual (Spanish, English, and Portuguese), has advised HNW/UHNW and institutional investors in portfolio structuring, asset allocation, and bespoke solutions (both discretionary and non-discretionary), in addition to providing independent private advisory services to large estates. His recognitions include the ALMA Award and the Best Investment Advisor – Corporate Clients award at Credicorp Capital.

From the Dollar to Real Yield: A Look at Emerging Markets

| By Amaya Uriarte | 0 Comentarios

“The Composite Risk Premium in the U.S.—Equities, Sovereign Debt, and Credit—is the Lowest Since 2000 and Points to Below-Average Returns in the Coming Years. Moreover, We Expect Mid-Cap Domestic Companies and Value-Oriented Stocks in Europe to Outperform the MSCI World Index, Along With Certain Growth Companies in the U.S. and, Above All, Emerging Markets,” Says Luca Paolini, Chief Strategist at Pictet AM.

In Paolini’s view, over the medium term, there are additional arguments in favor of emerging markets beyond benefiting from their secular growth and attractive valuations. “They Should Benefit From a Weaker Dollar, a Trend Toward Lower Real Interest Rates, and Higher Commodity Prices. Uncertainty About Global Trade Agreements Encourages Greater Investment and Flows Between These Economies,” he adds.

Furthermore, as is the case in other regions, the chief strategist believes that many emerging market companies are well positioned to take advantage of the expansion of artificial intelligence. “Emerging Asia Is at the Forefront of the Technological Revolution With a Growing Group of Companies Playing an Indispensable Role in the Global AI Supply Chain (Such as Advanced Semiconductor Manufacturers) and Others That May Challenge U.S. Leaders Due to Scalability and Monetization (Such as China’s Hyperscalers). India Relies Less on Foreign Investment Flows, Which Should Lead to Lower Volatility, as Its Domestic Investors Hold 18.5% of the Equity Market—the Highest Figure in Over Two Decades,” comments Paolini.

Tariffs and Supply Chains

According to Martin Schulz, Director of the International Equity Group at Federated Hermes, we are witnessing regional spheres of influence strengthen as geopolitical relations evolve, which encourages investors to pay closer attention to opportunities in emerging markets.

“Instead of Globalization, We Are Now Seeing Regionalization and Groupings Around Centers of Power, Alliances, Monetary Blocs, and Shared Interests. Global Trade Will Continue, but Likely on a Smaller Scale. However, Not Everything Is Changing. We Are Not Facing a Repeat of the Cold War, Where Trade Flows Across the Iron Curtain Were Virtually Nonexistent. For Now, China and the United States Have Put Their Rivalry on Hold: China Needs to Address a Weak Economy Mired in Deflation, and the Trump Administration Needs to Focus on Domestic Politics. I Don’t See Apple or Tesla Leaving China. Supply Chains Are Becoming More Local Than Before. We’re Also Seeing Chinese Companies Produce for the Local Market in Europe and Potentially Even in the United States,” says Schulz, explaining their view of the global landscape.

He also notes that in 2026, numerous elections will be held around the world, especially in South America. According to his analysis, this may alter expectations and increase short-term uncertainty but could lead to greater long-term stability. “In China, the Trade War With the United States Has Been Resolved for Now, Giving the Country the Opportunity to Focus on Economic Stimulus While Implementing Its Next Five-Year Plan. As Manufacturing Continues to Move Out of China Due to Costs and Trade Restrictions, This Should Benefit Many Other Asian Economies. Finally, We Believe That the Global Monetary Easing Cycle Will Support Emerging Markets Overall,” he argues.

A New Frontier for Real Yields

This macro context is complemented by a key data point: after more than a decade of underperformance compared to developed markets, emerging markets recorded some of the best performances globally in 2025, with gains exceeding 30%. In fact, equity indexes doubled the return of the S&P 500, and fixed income—both in local currencies and in U.S. dollars (USD)—also generated significant returns. For Mauro Ratto, Co-Founder and CIO at Plenisfer Investments (Part of Generali Investments), this is the strongest argument in favor of including emerging assets in portfolios.

“In Many Ways, This Was Atypical Behavior: While a Weak Dollar Typically Favors Emerging Markets—Given Their High Proportion of Dollar-Denominated Debt—New U.S. Tariffs Should Have Been an Obstacle. However, These Economies Showed a Surprising Degree of Adaptability in an Unfavorable Global Environment Marked by Widespread Geopolitical Tensions and a Weak Global Economic Cycle,” acknowledges Ratto.

According to the expert, emerging markets remain a highly diverse and heterogeneous universe, but most countries share a common trait: the pursuit, over several years, of fiscal and monetary orthodoxy. “While the West Grapples With Record Levels of Public Debt and Growing Deficits, Many Emerging Countries Today Exhibit Strong Budget Discipline, Monetary Policies That Have Remained Restrictive, and Contained Inflation,” he highlights.

For the asset manager, emerging markets not only represent a potential source of return but also an opportunity for diversification and protection in the event of a correction in developed markets, which today face a significant concentration risk in the U.S. technology sector. “This Risk Also Exists Within Emerging Market Indexes—Where the Top Six Companies Belong to the Technology Sector and Account for More Than a Quarter of the Index—but Diversification Remains Substantial: Investors Gain Exposure Both to Chinese Companies Competing Directly With Major U.S. Tech Firms and to Companies Operating in Key Nodes of the AI Value Chain, Such as Chip Manufacturers or Producers of Critical Components Like High-Bandwidth Memory. Furthermore, the Opportunity Set Extends Well Beyond This Theme—Especially in India, ASEAN, and Selectively in Latin America,” concludes Ratto.

The Fed Maintains Its Independence, but the Debate and Risks Will Persist

| By Amaya Uriarte | 0 Comentarios

After a 2025 marked by tensions between Fed Chair Jerome Powell and U.S. President Donald Trump, it was inevitable to raise the question of whether the Fed has lost its independence. In the opinion of our readers and social media followers (53%), the U.S. monetary institution is still following its own guidance. Additionally, it is noteworthy that 20% believe Trump is influencing the FOMC, and 13% do not believe that central banks are independent at all.

The Debate Over the Fed’s Independence Will Remain Alive

The debate over the independence of the Fed will remain ongoing, as it extends beyond the figure of Jerome Powell himself, whose term as Chair ends in May 2026. According to Felipe Mendoza, CEO of IMB Capital Quants, the discussion around his succession is intensifying. “Donald Trump will interview Christopher Waller for the position, while Kevin Warsh’s odds have risen to 41%, compared to the 90% that Kevin Hassett had at the beginning of December. Trump has stated that the next Fed Chair should consult him on interest rates and that he wants to see them at 1% or lower within a year. Jamie Dimon, CEO of JPMorgan, has said that Warsh would make a great Fed Chair. In this context, White House advisor Kevin Hassett argued that economic data points to inflation heading toward the 2% target and that, although Trump has strong views, the Fed must maintain its independence.”

Additionally, according to Álvaro Peró, Head of Fixed Income Investments at Capital Group, the debate surrounding the Fed is a clear example of a broader trend experienced in 2025. “Significant shifts have occurred in the macroeconomic and geopolitical landscape. Principles that have underpinned the global economy for decades—such as free trade, globalization, and central bank independence—are being called into question,” Peró explains.

The Risks of Losing Independence

According to experts at Vontobel, compromising the Fed’s independence entails significant risks. “When a central bank’s credibility weakens, markets stop interpreting its policies through the lens of economic data and begin to view them from a political perspective. This shift first becomes apparent in expectations. Survey-based measures may appear stable for some time, as both households and professional analysts tend to adjust their views gradually. However, market prices react more quickly. Investors incorporate an inflation risk premium into their base outlook, which is why implied inflation rates often exceed survey-based expectations once credibility is in doubt,” they explain.

In their view, uncertainty around the central bank’s reaction function raises the term premium on longer-dated maturities. “Long-term rates begin to reflect additional compensation for potential policy errors and inflation volatility, rather than just the expected path of short-term interest rates. If fiscal objectives—such as the desire to keep financing costs low relative to nominal growth—begin to influence monetary policy, decisions may tilt toward financial expediency. While this may ease short-term funding pressures for the public sector, it functions as an inflationary tax on savers and raises the required returns on private assets,” they add.

As history shows, financial conditions tend to follow a predictable sequence. That is, the yield curve steepens as the short end responds to a more accommodative monetary stance, while the long end shows resistance. Credit spreads settle at higher levels as lenders price in increased uncertainty. “The dollar tends to strengthen during periods of stress when liquidity tightens in a crisis, but it then weakens if real yields are suppressed and the policy framework appears less sound,” the asset manager’s experts conclude.

The Two Uncomfortable Questions About AI That Investors Face

| By Amaya Uriarte | 0 Comentarios

In presenting their outlooks for 2026, all international asset managers have devoted significant attention to artificial intelligence, both as an investment opportunity and as a key driver of economies and global growth.

“AI is a long-term wave, not just a theme. A technological wave—AI is the fourth wave after mainframes, personal computers connected to the Internet, and the mobile cloud—is defined by the fact that it affects all aspects of the economy. It requires investment across every layer of the tech stack, from silicon—semiconductors—to platforms, devices, and models, and every company becomes, in some way, a user of AI. These waves take several years to evolve, and in the case of AI, the pace of capacity development is constrained by deglobalization, permitting, energy availability, construction limitations, and availability within the computing supply chain,” emphasize Alison Porter, Graeme Clark, and Richard Clode, portfolio managers at Janus Henderson.

According to Janus Henderson portfolio managers, there is a circular problem, as the limiting factor for demand in computing power has been the available capacity to train and develop new models. “As we move from generative AI to agentic AI, more reasoning and memory capacity is needed to provide greater context. This requires significantly more computing power to increase token generation (units of data processed by AI models). We are seeing areas such as physical AI rapidly developing, with the expansion of autonomous driving and robotics testing worldwide. In short, looking ahead to 2026 and 2027, we believe demand for computing power will continue to outpace supply,” they argue.

Are We in an AI Bubble?

In contrast to this highly positive scenario, investors remain attentive to the ongoing debate over whether we are currently in an AI bubble. According to Karen Watkin, multi-asset portfolio manager at AllianceBernstein, the defining feature of this bull market is its narrow leadership. “AI-driven technology companies have delivered extraordinary gains, creating a K-shaped market: a few large winners while many are left behind. This concentration drives index returns but introduces fragility. The U.S. economy is asymmetrically exposed: wealthier households hold most of the equity and sustain consumption, so an AI correction could impact spending and potentially lead the economy into a recession,” she explains.

Watkin believes that, for now, fundamentals offer some reassurance: earnings growth—not just multiple expansion—has driven returns. According to her analysis, hyperscaler capex—though extraordinarily high—is largely funded by strong cash flows rather than debt, but signs of increasing leverage and debt issuance are being monitored. “We also observe more structural risks: circular funding patterns, such as repeated cross-investments and successive corporate transactions, which can introduce fragility. And while adoption trends are promising, imbalances between supply and demand, energy bottlenecks, and the risk of obsolescence could challenge the AI-driven economy,” she states.

The AllianceBernstein expert adds that elevated valuations do not guarantee poor short-term returns, but they do increase the risk of declines: “We believe that narrow leadership warrants greater diversification; asset classes such as low volatility equities can offer defensive exposure and attractive valuations, with a potential tailwind if yields fall.”

What Are the Implications of a Correction?

Until now, investment in artificial intelligence has been primarily financed through corporate cash flows and venture capital. However, as hyperscalers seek to sustain exponential growth in model size, data center construction, and chip supply, debt financing has begun to gain prominence once again.

With major U.S. equity indices becoming increasingly concentrated in AI leaders, in the view of the experts at Quality Growth (a Vontobel boutique), a significant correction could ripple through the economy not via layoffs or failed AI projects, but through the negative wealth effect caused by falling asset prices.

“This dynamic would be similar to what followed the dot-com bubble in 2000, when the decline in equity value disproportionately affected higher-income households and, consequently, overall consumer spending,” they explain.

In their view, a second transmission channel has already taken shape: capital expenditure in AI as a main driver of U.S. GDP. “By the end of 2025, technology-related capital expenditure (capex) is estimated to account for more than half of the quarterly growth in gross domestic product (GDP). This implies that the same force that has driven markets upward could become a drag if investment expectations are adjusted. In this way, AI has become both a tailwind and a potential vulnerability for the macroeconomic outlook in 2026,” conclude the team at Quality Growth.