Global financial leaders advise diversification amid rising geopolitical risks

[Photo by New York special coverage team]

Investors should seek an investment diversification strategy in times of economic volatility, according to José Feliciano, co-founder of Clearlake Capital Group LP.

During the Global Financial Leaders Forum organized by Maeil Business Newspaper in New York, U.S., on Tuesday (local time), Feliciano noted that the Israel-Palestine conflict is having a negative impact on the global economy and that while the U.S. Federal Reserve is unlikely to raise interest rates further, inflation concerns make it difficult to turn to rate cuts.

He suggested an “All Weather Approach” as a diversification strategy to weather economic fluctuations, which considers countries, asset types, and investment preferences.

Feliciano recommended a portfolio that is diversified across geographies and various assets to achieve stable returns regardless of the economic cycle.

Feliciano was one of the Wall Street gurus that attended the forum and shared insights on the global economy. Financial leaders diagnosed that the phenomenon of high interest rates, high oil prices, and a strong dollar will continue for the foreseeable future, while predicting short-term rallies in the financial markets.

The forum, co-hosted by Maeil Business Newspaper, Korea Finance Society, and The Korea Society under the theme of “Strategies to Win in the New Economic Order,” brought together over 160 financial professionals from both Korea and the U.S. to explore investment strategies to overcome crises.

Among the attendees were Yoon Hee-sung, president of the Export-Import Bank of Korea, Lee Eun-hyung, vice chairman at Hana Financial Group Inc., Lee Chang-kwon, president and chief executive officer at KB Kookmin Card Co., and Lee Young-jong, chief executive officer of Shinhan Life Insurance Co.

According to Scott Kleinman, co-president of Apollo Global Management Inc., if the Israel-Palestine conflict escalates with the involvement of additional Middle Eastern countries, it could have a major impact on international oil prices and global trade.

He noted that the Russia-Ukraine war was expected to end quickly, but it’s been dragging on for two years, saying that there is a potential for a prolonged period of unrest in the Middle East.

Apollo Global Management is one of the world’s top four private equity funds.

Kleinman said that the U.S. Fed would keep benchmark interest rates high in the 5 percent range until next year, predicting a possible recession in the U.S. early next year as borrowing costs rise and corporate order backlogs shrink.

He also added that investors should pay attention to the climate change industry as a new investment opportunity.

Yoon Je-seong, chief investment officer of New York Life Asset Management LLC, diagnosed that the U.S. economy could potentially enter a recession as early as the end of this year, but added that “if geopolitical risks in the Middle East do not escalate further, we may see short rallies in the stock market.”