The World Is Shifting—And a New “Magnificent Seven” Could Be Emerging
The investment world is entering uncharted waters. After decades of riding the globalisation wave, a perfect storm of pandemic supply chain disruptions, geopolitical tensions, and the Russia-Ukraine war is forcing investors to completely rethink their playbook on growth, efficiency, and risk.
But according to Robert Lancastle, senior fund manager at JO Hambro, this upheaval could be creating golden opportunities for a new generation of market leaders—and those long-overlooked, locally rooted businesses might just form the next “Magnificent Seven.”
Globalisation’s Glory Days Are Over
For decades, the winning formula was simple: globalise your production and sales. Companies could peddle their products worldwide while manufacturing them wherever labour was dirt cheap, maximising profits in a relatively stable global order.
“Since the global financial crisis, one of the best ways of winning was to globalise a product you already had. Not just sell it locally, but sell it to the other side of the world,” Lancastle explained.
Producing goods overseas was the natural next step, with cost efficiencies aplenty. “The way to boost profits was not to produce locally, but to manufacture goods on the other side of the world where it was cheaper. This strategy made sense for a time, especially in a world dominated by a uni-polar structure. Everyone got on very nicely.”
But that model is now showing serious cracks. The pandemic exposed dangerous over-reliance on certain manufacturing hubs, while the Ukraine war laid bare Europe’s dependence on Russian energy. And semiconductor production? It’s heavily concentrated in Taiwan, leaving the entire world vulnerable to supply shocks.
“The reality is that has now got overstretched. We’re too reliant on a single country for making the world’s supply of leading-edge semiconductor chips – Taiwan,” Lancastle said.
The New Game: Resilience and Local Power
In response, governments are pivoting hard toward strengthening domestic systems—bringing manufacturing back home, beefing up defence capabilities, and diversifying energy sources.
“What that means is governments and policymakers are increasingly saying, right, we need resilience in the system. We need to bring back home our manufacturing. We need to look after our own defence capabilities. We need many sources of energy supply,” he noted.
Lancastle believes these seismic shifts are creating opportunities in sectors that have been gathering dust for years. Long-standing heavy industry and infrastructure businesses are suddenly back in the spotlight, poised to benefit from renewed investment. “These dormant giants are starting to wake up, that have been overlooked for 15 years in those areas,” he said.
Meet the New Magnificent Seven
When asked whether a fresh set of market titans could emerge from this transformation, Lancastle pointed to domestic, locally anchored businesses that are shielded from tariffs and geopolitical chaos.
“So you’re going to want to look at things that are more domestic in their nature, more localised in their nature, so they don’t suffer the disruption from tariffs. But even if tariffs disappear, the risk remains that someone says, ‘I can’t manufacture that for you anymore, because my government’s telling me I can’t export it to you.'”
He spotlighted sectors with inherently local characteristics: utilities, materials, defence, and energy infrastructure. Take cement or aggregates, for instance—they’re expensive to haul around and naturally tied to local markets.
“We have growing energy needs for things like AI, and the materials businesses, and you don’t want to ship things very far. EU defence, and energy infrastructure are capital-intensive sectors, often cyclical, but these are opportunity sectors,” he said.
Despite flying under the radar of mainstream growth investors, these sectors are starting to show real teeth. Capital expenditures have been climbing, backed by government investment, and customers are actually paying up for improvements—creating both growth momentum and pricing power.
“In sectors like cement, EU defence and utilities, we’ve seen two clear trends over the last two to three years. First, activity and capital spending are rising. Second, importantly, their customers are paying for it. This means not only is growth increasing, but these companies also have stronger pricing power, which further supports long-term growth,” he explained.
Lancastle highlighted European cement companies as a prime example. Historically, they generated around 5% returns on capital—now some are pushing into double digits, while growth rates have jumped to the mid to high single digits. “This is before the German infrastructure bill even kicks in, and in the future we will see the fruits of the stimulus that has been put in, in the likes of Europe and the US,” he said.
Spain: A Glimpse of What’s Possible
Lancastle pointed to Spain as a compelling case study of localised growth. After weathering years of economic setbacks—including the property crash and COVID’s devastating blow to tourism—the country is now firing on all cylinders. “We now are three quite substantial years into a real boom in Spanish tourism,” he said.
He flagged select Spanish banks and airport infrastructure projects as prime examples of sectors ready to ride sustained growth over the next five to ten years.
The Bottom Line
For investors who’ve spent years banking on globalisation’s tailwinds, Lancastle’s message is crystal clear: the next decade could richly reward those who spot high-quality, locally rooted businesses before they hit the mainstream radar.
Utilities, materials, energy infrastructure, defence, and select domestic banks could be the building blocks of the next ‘Magnificent Seven’—companies with the scale, pricing power, and local security to thrive as global interdependence fades.
“The environment that we saw from the global financial crisis of 2007–2009 until 2022 had its place,” Lancastle said. “But since then… These dormant giants are starting to wake up that have been overlooked for 15 years in those kind of areas.”
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