Macro Jenga: Rebuilding after a global reset
The post-war world order has come apart. The question now is whether it gets rebuilt as one tower, several smaller ones, or not at all.
The institutions and frameworks that once kept trade moving and disputes contained are no longer functioning in the same way. The global outsourcing that optimised supply chains for efficiency is now being questioned, as the world fragments into competing regional blocs.
The geopolitical backdrop only reinforces the point. Ukraine, Gaza and now Iran have exposed how fragile the global system has become. The Strait of Hormuz remains one of the most critical chokepoints in the world, with major Asian economies heavily dependent on oil flows through the region. Japan sources roughly 75 percent of its oil through Hormuz, India around 60 percent and China approximately 50 percent.
Even if tensions eased tomorrow, the disruption would not disappear overnight. Clearing mines, repairing damaged infrastructure and restoring confidence in supply routes could take years, not weeks. The world is realising that resilience matters just as much as efficiency.
When you step back and look regionally, the picture becomes clearer.
The US is now one of the world’s dominant energy producers across oil, LNG and petrochemicals. Combined with manufacturing capacity in Mexico and untapped potential in Venezuela, the region has the ingredients to attract both public and private capital for decades to come.
Russia also remains largely self-sufficient, particularly in energy. What becomes interesting is the potential geopolitical pivot that could emerge from this. Twenty years ago, the US welcomed China into the global trading system partly as a counterbalance to Russia. Today, there is a growing argument that Washington may eventually see Russia as a strategic counterweight to China instead.
We are already seeing signals of this through discussions around Arctic drilling projects and renewed interest in Western energy technology partnerships. Sanctions have left Russia short of capital and technology, while the West increasingly needs stable energy supply. Europe, meanwhile, faces a much tougher challenge. Without access to Russian energy, Europe is now heavily dependent on US LNG and oil exports, which come with longer supply chains, higher costs and greater storage requirements.
APAC may face the greatest pressure of all because of its dependence on imported energy. Countries can build strategic reserves, but reserves are finite. The vulnerability remains. These geopolitical changes are now feeding directly into markets.
The US continues to borrow aggressively, with debt levels pushing towards forty trillion dollars and fiscal spending still expanding. Yet despite constant predictions of de-dollarisation, the US dollar remains dominant. I have spent thirty-five years hearing forecasts that the dollar’s role would collapse. It still has not happened.
In fact, I believe the opposite may occur. America’s strengths mean capital will naturally gravitate towards it. That supports a stronger US dollar over the long term, particularly as money flows out of more exposed emerging markets.
Inflation is a different story. The chart looks uncomfortably like the 1960s to 1980s, and the market is already pricing 5% US inflation by year-end. Above 3%, the stock–bond correlation breaks. Rate hikes are now the global trend and emerging-market currencies are getting hit as capital pulls back to the dollar.
Beyond markets, some of the most important structural changes are happening in Hong Kong.
Hong Kong is positioning itself aggressively as a future centre for both gold and digital finance. Earlier this year, the Hong Kong Gold Exchange and Shanghai Gold Exchange announced closer integration, alongside a major expansion of physical gold vaulting capacity at Hong Kong International Airport. The scale of the project is enormous and signals a clear ambition to compete directly with London and New York for market share in precious metals trading.
At the same time, Hong Kong has embraced a decentralised approach to stablecoins. That matters because stablecoins could fundamentally reshape cross-border capital flows, allowing money to move faster and more efficiently across jurisdictions in ways traditional banking systems often cannot support.
In many ways, Hong Kong is attempting to recreate what London achieved in the late 1960s when it became the offshore centre for US dollar markets outside America itself.
The world is fragmenting into new regional power centres. The old Jenga tower is not going back together in the same way it existed before.
The real question now is what the new structure looks like, and who adapts quickly enough to benefit from it.
If your business is navigating volatility in currencies, capital flows or cross-border payments, APA can help you make sense of an increasingly fragmented world. Get in touch with the team to continue the conversation.
