Value Investing in a Volatile Global Market: Seizing Undervalued Opportunities Amid Trade Uncertainty and Geopolitical Risks

In 2025, the global investment landscape is defined by a collision of geopolitical risks and trade uncertainties. From the lingering effects of the Russia-Ukraine conflict to the U.S.-China tech cold war, and the accelerating shift toward energy transition, markets are navigating a complex web of challenges. Yet, for value investors, volatility is not a barrier—it is an opportunity. By identifying sectors and assets undervalued by short-term fears, investors can position themselves to capitalize on long-term fundamentals.

The Case for Value Investing in a Geopolitical Context

The year 2025 has seen a resurgence of protectionist policies, cyber threats, and energy market disruptions. These factors have created mispricings across asset classes, particularly in sectors that are critical to the global economy but currently out of favor. For example, energy security concerns have driven up costs for renewables, while U.S. tariffs on Chinese semiconductors have stifled demand for AI infrastructure. However, these challenges also highlight structural shifts that value investors can exploit.

Key Risks Shaping the Market in 2025:
- U.S.-China Trade Tensions: Tariffs and export controls are reshaping global supply chains, with AI and semiconductor industries at the epicenter.
- Energy Transition Pressures: The push for decarbonization has created bottlenecks in critical mineral supply chains and exposed vulnerabilities in fossil fuel-dependent economies.
- Currency Volatility: The U.S. dollar's weakening position against emerging market currencies has created opportunities for undervalued regional assets.
- Cybersecurity and Inflationary Pressures: Digitized infrastructure and global supply chains face heightened risks, driving demand for defensive sectors like gold and cybersecurity.

Undervalued Sectors: AI, Commodities, and Currencies

1. AI and Semiconductor Stocks: The New Gold Rush

The AI sector, particularly semiconductor companies, is a prime example of undervaluation amid geopolitical risk. Nvidia (NVDA) has emerged as a standout player, despite U.S. export restrictions on its H20 chips to China. While these restrictions initially caused a $4.5 billion inventory write-off, the Trump administration's July 2025 policy shift has reopened $10–$20 billion in potential revenue by 2026.

Nvidia's resilience is underpinned by its dominance in the CUDA ecosystem, which remains the gold standard for AI development. Its recent Blackwell chip deal with Saudi Arabia's Humain and a 103% surge in automotive revenue diversify its exposure to geopolitical shocks. While its P/E ratio of 55x appears elevated, analysts project 37% annual earnings growth over the next five years, making it a compelling long-term play.

Investment Insight: For investors, Nvidia represents a high-growth, high-risk opportunity. Diversifying with U.S. reshoring partners like TSMC (TSM) and Micron (MU) can mitigate supply chain risks while leveraging the AI boom.

2. Commodities: Gold and Copper as Inflation Hedges

Commodities have historically thrived in times of uncertainty, and 2025 is no exception. Gold, for instance, is on a long-term bull run, with central banks purchasing over 1,100 tons in 2024 alone. Analysts project gold prices to reach $3,700 by year-end 2025, driven by its role as a hedge against U.S. fiscal deficits and geopolitical instability.

Copper, meanwhile, is gaining attention due to its role in the energy transition. U.S. tariffs under Section 232 of the Trade Expansion Act could disrupt global supply chains, creating volatility for producers. However, companies with strong balance sheets, such as Freeport-McMoRan (FCX), are well-positioned to benefit from a potential price surge.

Investment Insight: Gold and copper offer defensive and cyclical opportunities, respectively. A balanced portfolio could include a mix of physical gold ETFs and copper miners to hedge against inflation and industrial demand.

3. Currencies: The Yuan and the Euro as Undervalued Assets

Currency markets in 2025 are shaped by diverging monetary policies and trade dynamics. The Chinese yuan (CNY) has shown surprising resilience despite U.S. tariffs of up to 145% on Chinese goods. The People's Bank of China (PBOC) has stabilized the USD/CNY exchange rate through daily interventions, keeping the yuan near 7.26 as of June 2025. This controlled environment has allowed China to maintain a $114.8 billion trade surplus with non-U.S. partners in June alone, supporting the yuan's relative strength.

The euro has also emerged as a beneficiary of the dollar's decline, with EUR/USD reaching 1.20 in mid-2025. European governments' fiscal stimulus and Germany's policy shifts make the eurozone an attractive long-term play.

Investment Insight: Undervalued emerging market currencies like the yuan and regional currencies in the Eurozone could offer attractive returns as global trade diversifies. However, investors should monitor U.S. policy shifts and geopolitical escalations.

Strategies for Navigating Volatility

1. Diversify Across Sectors and Geographies: Avoid overexposure to any single market or asset class. For example, pair AI stocks with gold ETFs to balance growth and defense.
2. Focus on Earnings Resilience: Prioritize companies with strong cash reserves and adaptable supply chains, such as Nvidia and TSMC.
3. Monitor Policy Developments: Geopolitical risks are often policy-driven. Track U.S.-China trade negotiations and central bank actions for early signals of market shifts.
4. Leverage Undervalued Multiples: Sectors like utilities and real estate, which have underperformed due to AI-driven market rotation, may offer attractive valuations for long-term investors.

Conclusion

The volatility of 2025 is not a reason to retreat—it is a call to act with precision. By identifying undervalued sectors like AI, commodities, and currencies, investors can position themselves to benefit from both cyclical and structural trends. The key lies in balancing risk with reward, leveraging geopolitical uncertainty as a catalyst for value creation. As the global economy navigates this turbulent era, those who look beyond the noise will find fertile ground for long-term gains.