Investing.com - The geopolitical climate is transitioning away from one centered around the United States and towards a more "multipolar" world, according to analysts at BCA Research.
In a note to clients, the strategists led by Juan Correa and Marko Papic argued that the current state of play in geopolitics -- what they called "the operating system software" -- is largely geared towards a "unipolar" world, where one country acts as a hegemon presiding over global events.
Since the end of the Cold War, the United States has largely played this part, while its economy has morphed into a "consumer of last resort" geared towards imports and consumption, the analysts added.
However, evidence that this era of U.S.-dominated "unipolarity" is coming to an end is "all around us", they said, citing in part a perceived rise in international conflicts and less concentration of military procurement in one country.
"While the data is not definitive of what kind of a world is emerging, we can confidently say that it is not a unipolar world and, less confidently, that it is likely to be multipolar," the analysts said.
They defined this ordering as a global system that lacks one or two superpowers capable of enforcing rules and norms of behavior -- and is instead populated with multiple players, "each capable of pursuing an independent foreign policy".
Against this backdrop, the U.S. cannot remain the central destination for foreign capital flows, suggesting that "the next five-to-ten years will be a decade of transition, during which the world will see the global macro [...] balances shift", the analysts said.
In particular, this evolution may see a move in the U.S. away from consumption, an uptick in European Union investment and an increase in consumption in China, they said. Such a period of change would likely impact investors by driving up benchmark 10-year U.S. Treasury yields, devaluing the U.S. dollar, and leading to an underperformance in U.S. equities compared to their overseas peers, the analysts added.