MRB Theme A New Phase Of Global LeaderShift August 4 2026

INVESTMENT THEME Independent Investment Strategy August 4, 2026

A New Phase Of Global LeaderShift The economic dominance of the U.S. and other advanced economies over China and the emerging world has progressively eroded in recent decades. A shift in political power is now underway. Financial wealth has lagged these shifts, but should follow in the decade ahead.

Global LeaderShift is a longstanding MRB phrase Chart 1 The Shift In Economic used to describe the shift in economic, financial Power From DM To EM and political leadership from developed markets Composition Of Global Nominal GDP* (US$ tn) (DM) to emerging markets (EM). This theme is often 120 Developed Markets 120

simplified to reflect China’s progressive rise as a Emerging Markets (all panels) global superpower that now shares the stage with 80 80 the U.S. Today’s report provides our latest research on the Global LeaderShift theme, albeit with a focus 40 40 on the evolution of economic leadership. 0 0 MRB originally introduced our Global LeaderShift Nominal GDP* (% Of Global)

theme in the early-2010s1. At that time, we noted: 80 80

z The developed world still had a clear economic 60 60

dominance over the emerging world. However, 40 40 prolonged post-GFC deleveraging would markedly slow growth in the U.S. and euro 20 © 2026 20 area, and provide a decade-long window for EM economies to narrow the gap, even though * Source: IMF EM would also expand at a reduced pace compared with the preceding decade. Indeed, this economic convergence has largely occurred (chart 1).

z Early last decade, much of the developed world dismissed the idea that the emerging world would rise in importance and rival many DM countries. Indeed, investors and

1 MRB "Theme – Global LeaderShift (Part I)", March 13, 2012 and MRB "Theme – Global LeaderShift (Part II)", March 20, 2012, MRB "Theme – Global LeaderShift (Part I): Framework & Timing", April 29 2014 and MRB "Theme – Global LeaderShift (Part II): Implications & Investment Strategy", May 1, 2014

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INVESTMENT THEME l August 4, 2026

politicians repeatedly forecasted a collapse

? in the Chinese economy and/or weakening

Got a Question of its leadership, which was a narrative MRB correctly leaned against.

z What was remarkable to us 10-15 years ago, for the Team is that it seemed there was a sense of denial among U.S. and most DM politicians that Ask us anything - Click Here

China would emerge as a rival superpower. Although this provided a prolonged runway for the Chinese economy to evolve, we noted it would eventually result in increased confrontations between the two countries. This is now the case, but it is too late for U.S. authorities to meaningfully curb the Chinese economy.

z In fact, current U.S. trade policy is misguided, as the U.S. will not be able Economic power to reshore manufacturing. The U.S. may at best be able to influence has reblanced... the distribution of economic power away from China and to other EM economies, and perhaps re-coup some output back to the U.S. from other ...DM no longer DM economies, such as Canada. dominates EM

z Finally, we suggested that China would likely focus on solidifying its economic competitiveness and leadership. Once this objective had been completed, Chinese policymakers would be less compromising and demand a greater seat in the global political arena. Repeated policy pushback and stern warnings to the Trump administration highlight that we have now entered this phase of Global LeaderShift. Ironically, the U.S. trade war provided a stress test that highlighted the resilience of the Chinese economy and emboldened its policymakers. The U.S. and China are now In short, Global LeaderShift is an overarching very long secular theme that has competing been in place for several decades, but is now reaching an important new phase. superpowers China and the aggregate EM will have much greater influence on shaping the economic, political and investment landscape over the next decade and beyond. That said…