In a world where AI dominates and geopolitics shift rapidly, Allianz’s global CIO Virginie Maisonneuve embraces ‘Digital Darwinism’, steering investment strategies through innovation, China’s rise, and Europe’s struggle to regain its competitive edge.
As Europe confronts the accelerating forces of ‘digital Darwinism’, where only the fastest and most adaptable economies thrive, professional investors and asset owners are increasingly aware of the continent’s vulnerabilities. The ongoing talent drain to tech hubs like Silicon Valley, combined with Europe’s slow adoption of artificial intelligence (AI), is not only threatening future competitiveness but also reshaping investment opportunities across sectors.
For investors, understanding Europe’s geopolitical balancing act—particularly its relations with China and the U.S.—is crucial to navigating the volatility in global markets. Virginie Maisonneuve, global chief investment officer equity at Allianz Global Investors, highlights that while Europe has the potential to succeed, immediate action is needed to retain talent, close the innovation gap, and adapt to the rapidly evolving global landscape.
Talent drain is existential
Talking about Europe’s competitiveness, Maisonneuve begins with a familiar refrain: the talent drain. “Europe has the talents, but a lot of talents leave,” she said, pointing out that Europe’s brightest minds often seek opportunities elsewhere. “How do we retain all those bright people and innovation, instead of them getting an education and then going to Silicon Valley?” For Maisonneuve, the question is existential. Europe needs to create an environment where innovation can flourish locally, and where failure is seen as part of the journey rather than a mark of shame.
“How do we retain all those bright people and innovation, instead of them getting an education and then going to Silicon Valley?”
Maisonneuve sat down with Investment Officer in Frankfurt, a day after the long-awaited release in Brussels of Mario Draghi’s report on European competitiveness, which identifies Europe’s fragmented industrial landscape and regulatory barriers as key obstacles to innovation. Draghi warns that without a concerted effort to retain talent and foster innovation, Europe risks falling further behind global competitors like the U.S. and China.
AI: The core of geopolitics
At the heart of these global shifts is artificial intelligence, a field where Maisonneuve sees both tremendous opportunity and significant risk. “AI is at the core of it,” she said, referring to the complexities of geopolitics. “That’s digital Darwinism at the core. One of the reasons why China advanced so fast in artificial intelligence is that you need data to train AI, and China has the largest Internet user base in the world with no restriction.”
China’s ability to train its AI models more quickly, thanks to its vast, unrestricted access to data, has propelled it to the forefront of global AI innovation. This rapid progress has spurred geopolitical tensions, with Western nations imposing sanctions and trade restrictions aimed at slowing China’s technological rise. Maisonneuve noted that this dynamic is reshaping global power, with AI serving as a critical battlefield in the race for supremacy.
“AI is digital Darwinism at the core. One of the reasons why China advanced so fast in artificial intelligence is that you need data to train AI, and China has the largest Internet user base in the world with no restriction.”
Draghi’s report also underscores the importance of AI, warning that Europe must catch up to avoid being left behind in the next wave of digital innovation. Maisonneuve’s concept of ‘digital Darwinism’—where nations that can best adapt to the rapid advancements in technology will thrive—perfectly encapsulates the urgency for Europe to accelerate its AI development.
The need for clear priorities
Beyond talent retention and AI Maisonneuve also emphasised the continent’s fragmentation as a challenge. “We need to have a leader who can bring everybody together and say, ‘What are the top five priorities?’,” she said. Europe’s divided attention, with numerous portfolios and scattered initiatives, is holding it back from making meaningful progress on a global scale.
Draghi’s report highlights the same issue, noting that while Europe has strong fundamentals—excellent education systems, a commitment to welfare, and ambitious climate targets—it struggles to convert these strengths into competitive industries. Both Draghi and Maisonneuve agree that Europe must unify its efforts, streamline its industrial policies, and focus on the sectors that will drive future growth, such as AI, biotech, and clean technologies.
Complex relationship with China
Maisonneuve, who has closely followed China for 37 years, also pointed to Europe’s unique opportunity to strengthen ties with China, particularly as tensions between China and the U.S. escalate. “There’s a unique opportunity for Europe to cement a partnership with China because of the feeling of betrayal that, I believe, China feels versus the U.S.,” she explained, adding that China remains a crucial partner in addressing global challenges like climate change.
“There’s a unique opportunity for Europe to cement a partnership with China because of the feeling of betrayal that I believe China feels versus the U.S.”
China’s advancements in electric vehicles (EVs) and renewable energy technologies could serve as a bridge for deeper cooperation with Europe, even as trade tariffs and geopolitical concerns complicate the relationship. Draghi’s report acknowledges that Europe must navigate these complexities carefully, ensuring that it can benefit from Chinese innovation while protecting its own industries from being outcompeted.
Investing in a volatile global landscape
Given these geopolitical dynamics, Maisonneuve stressed the importance of understanding how global events impact investment decisions. Allianz Global Investors, she noted, integrates AI across its investment strategies, including growth or value strategies, multi factor strategies and thematic funds. “Geopolitics definitely are important. Markets want stability and predictability, and geopolitics creates shock to the system,” she said, cautioning that while market shocks can sometimes present buying opportunities, they can also be a trigger of long-term structural shifts.
Her mention of ‘digital Darwinism’ in the context of China’s AI prowess reinforces the idea that investors must pay close attention to these structural changes, which affect everything from supply chains to asset valuations. Maisonneuve also emphasised the need for long-term thinking in thematic investing, highlighting opportunities in areas like climate transition, tech, and small-cap stocks.
Optimism amid uncertainty
For Europe, the stakes are high. With rising geopolitical tensions, rapid tech advances, and competition from China and the US, Maisonneuve’s message is clear: Europe must act now or risk falling behind. Retaining talent, embracing innovation, and adapting to ‘digital Darwinism’ are essential. Despite the challenges, Maisonneuve is optimistic that unified efforts and AI-driven innovation can help Europe thrive in this shifting global landscape.
Despite these challenges, Maisonneuve remains cautiously optimistic. “I am hopeful that in the end, the leaders will come together,” she said.