Investors urged to prepare for ‘structural shifts’ reshaping markets

New commentary from advisory and accounting firm, HLB Mann Judd, has warned investors to prepare for a “very different” market environment ahead, as “structural shifts” underpinned by powerful macroeconomic trends continue to shape how returns are delivered.

Brisbane partner, Andrew Buchan, said a perfect storm of “more government intervention, the reversal of globalisation, rising geopolitical tensions, climate transition costs and the demographic pressures of an ageing population and shrinking workforces” combined with the “social uncertainty around artificial intelligence (AI)” is setting the stage for an investment landscape more susceptible to inflation and without the backing of strong productivity growth.

“The past decade has been exceptionally kind to investors,” he said. 

“We have lived through a unique combination of low inflation, falling interest rates, globalisation, favourable demographics, and rapid technological innovation. But those conditions are changing, and investors need to be ready for a very different environment ahead.

“These forces are bigger than market cycles. They are structural shifts, and they’re reshaping the market in ways that will influence returns for years to come.

“Moderate returns should be the baseline expectation for investors over the next few years. The extraordinary tailwinds of the past few decades are unlikely to return quickly.”

Buchan said considering these six themes is crucial for investors to remain afloat as markets change.

 A move to bigger government and a shift away from economic rationalism
“Governments are becoming far more active in their economies,” Buchan said. “Higher spending, increased regulation and rising public debt may support social stability, but they risk crowding out private investment and slowing productivity growth. We’re moving into an era of more managed economic outcomes.”

The reversal of globalisation
“The assumption of frictionless global trade is fading,” he said. “Friend-shoring, trade barriers, and industrial policy are pushing up costs and creating a world where regional resilience matters more than global efficiency. For investors, that means inflationary pressure and more volatility in supply chains.”

Escalating geopolitical tensions
“We’ve moved from a unipolar to a multipolar world.” he said. “Competition between major powers is increasing, and that brings instability. While sectors like defence, cybersecurity and energy security may benefit, geopolitical risk is now an everyday factor, not an outlier.”

Climate change and the cost of decarbonisation
“The transition to net zero will deliver huge long-term opportunities, but it isn’t free,” he said. “In the near term, investors should expect higher costs, tighter regulation, and inflationary impacts. But those who position early stand to benefit as technology and efficiency gains accelerate.”

Demographic headwinds
“Ageing populations and shrinking workforces are creating productivity challenges across advanced economies,” Buchan said. “At the same time, fast-growing emerging markets may offer compelling opportunities for those willing to broaden their investment horizons.”

Social uncertainty around AI
“Rapid advances in AI are creating widespread uncertainty about its impact on jobs, social cohesion, and everyday life, ranging from workforce disruption to questions of trust, ethics and accountability. Conversely, AI offers significant opportunities to enhance productivity, improve decision-making and unlock new forms of economic and social value.”

Buchan also reminded investors that adopting a “disciplined” investment approach would help deliver on a long-term strategy.

“In an environment like this, success won’t come from trying to pick short-term market movements. It will come from diversification, managing risk well, and staying invested through uncertainty. Consistency and patience will matter more than ever,” he said.

“Investors should recognise that the full, negative, and positive, economic impact [of technologies such as AI and automation] may take time to materialise.

“Despite the challenges, there are still attractive opportunities. But investors need to reset expectations, stay disciplined and prepare for a world where the old playbook doesn’t apply.”