Multiverse thinking in a web of changes

Many decades ago, at the height of the movement to promote globalization and regional integration, the business mantra to “Think Global, Strategize Regional, and Act Local” was being pushed. This is, of course, a modification of René Jules Dubos’ environmental maxim to “Think Globally, Act Locally.”

Nevertheless, Philippine investors should find wisdom in such a framework, considering how local markets today continue to be swayed heavily by global developments and structural changes as reflected in external indicators such as the exchange rate, the balance of trade, the gross international reserves, and our overseas remittances.

This framework requires some futures (or perhaps more accurately, multiverse) thinking, which means investors need to apply scenario analysis to trends that may be emerging. These trends may amount to nothing and fizzle out in a few months.

In the short term, they may cause fear or greed to drive market sentiment and cause some volatility. However, because markets are complex systems, some trends, if sustained over time, can develop scale and ride on information cascades that eventually develop into bubbles or contagion. These are powerful market forces that one can either ride on or hedge entirely.

An example would be the protests in France. These protests were reportedly destructive and widespread, and were becoming broader in scope. This is not unnatural, considering that France’s history celebrates civil rights and action and that, more recently, similar protests happened in 2023.

However, protests are not just happening in France. We are seeing protests (but not as destructive) happening in Italy, Spain, Portugal, Albania and Serbia.

The commonalities here are economic grievances, mounting fiscal pressures, and youth-led movements. While the probability is still very low, the scenario of social contagion cannot be dismissed, given the precedents of the Arab Spring of 2010 and the Spring of Nations of 1848.

Given the complexity, it is difficult to predict the effects on the economy and markets, but the European Union (EU) accounts for 11 percent of total exports and around five percent of imports, based on data from the Philippine Statistics Authority (PSA) for September 2026.

Looking at the US markets as another example, the biggest news is that Google lost close to US$500 billion in market value in a single day. The loss was reportedly equivalent to 13 percent of the market capitalization of its parent company, Alphabet, which ended up at around US$3.4 trillion to US$3.7 trillion at the end of trading on 29 October.

While other artificial intelligence (AI) stocks also declined, the focal point of reports was on Google because of concerns about the economics of the technology. More specifically, the concern is that the use of the AI mode in the search function of the browser may have led to lower monetization that affected Google’s search advertising revenue growth.

While the AI mode has been very helpful in searches and overall productivity, investors need to be aware that Google has exposure to shared services in the Philippines across different functions, some of which may include advertising and business support.

More importantly, the strong growth of our exports over the past 12 months is largely attributed to demand for AI semiconductors. From a macro perspective, investors need to consider how AI risks, as perceived by the financial markets, can have an impact on GDP in 2027–2028.

The last example is more regional. Over the past couple of weeks, we have seen dialogue and action between Singapore and Indonesia that involved the haze from the forest fires affecting other countries, such as Singapore.

Singapore has focused on investigating Indonesian companies that may be connected to the fires and are using the former’s powerful capital markets. Indonesia then announced it would reduce natural gas exports to Singapore. Both eventually agreed to form a joint task force for cross-border environmental enforcement regarding these forest fires.

Indonesia is not exactly the favorite market these days because MSCI is holding consultations that may downgrade the status of its market from emerging to stand-alone due to market transparency and investability concerns.

This regional scenario may have implications on a broader scale. Singapore understands its energy vulnerability and continues to engage its neighbors. This week, Singapore and the Philippines signed an energy agreement that promotes cooperation in developing cross-border electricity interconnection and peaceful nuclear energy development.

As many structural changes occur around the world, it becomes increasingly important to look outward because these changes contain not just the risks but the opportunities as well. The important part, however, is that the actions to be taken cannot be carried out in silos.

Just as these structural changes are born of complex systems or form a web of changes, navigating them requires a systemic approach. The goal is not to predict every change but to prepare for how these changes connect.