Third, reduced technology sharing and collaboration will hamper the widespread adoption of best practices, thereby reducing efficiency and increasing costs. Fragmentation in the real economy will also have an impact on capital flows and financial markets. Geoeconomic fragmentation elevates financial market risk and disruption, as capital flows become more regionalised and less global. Consequently, this reduces market liquidity and returns and increases market volatility. The impact of disruptions in cross-border capital flows falls disproportionately on the less developed countries. In short, no country will emerge unscathed with rising geoeconomic fragmentation, with emerging market economies set to bear the brunt of reduced trade and capital mobility. In the last decade, emerging market financial assets benefitted from the rising tide of capital inflows that created a virtuous cycle of capital market reforms, deeper liquidity, and vibrant market development, which in turn drew in more capital inflows. The impact of a slowdown in capital inflows would be felt most acutely in those countries with the least developed capital markets and rely the most on foreign capital, putting them at risk of financial or balance of payments crises. Emerging markets that have already reached a more advanced stage of development, included in global indices, and run healthy external balances may be more resilient. LONG TERM: CLIMATE CHANGE  Perhaps the most significant financial risk for investors over the long term is climate change. This risk can materialise in two ways.

Many green and transition projects in emerging markets pose risks that are not commensurate with their expected returns. We need catalytic or concessional capital from multilateral banks, public and philanthropic sources to improve project bankability and crowd in private sector capital. We need to strengthen the financial ecosystem to deploy blended finance at scale. This involves looking beyond the financing of individual projects and moving to a portfolio approach whereby concentration risks can be reduced through a diversified pool of assets. For instance, via multi-asset funds which invest in small scale renewable energy projects in specific markets. Securitisation can also mobilise private institutional capital, by allowing capital to be recycled from holding typically illiquid green and transition assets. CONCLUSION In sum, the operating environment for asset managers has become profoundly different from the last two decades, with inflation, geo-economic fragmentation, and climate change emerging as key drivers of financial markets. I hope today’s conference will give you insights on how to manage the risks and seize the opportunities ahead. Thank you. *** [1] The global inflation figures cited in this sub-para are based on the PPP-based weighted average of  Singapore’s top 14 trading partners. [2] Forsythe, E, Kahn, L B, Lange, F and Wiczer, D (2022), “Where have all the workers gone? Recalls,  retirements and reallocation in the COVID recovery”, Labour Economics, vol. 78, pp. 1 – 15. [3] Peri G and Ziour R (2022), “Changes in International and Internal Native Mobility after Covid-19 in the  US”, NBER Working Paper, 30811.