The Big Picture: More rotation, less direction
Distortions in the data mean that higher inflation readings are simply a red herring. The extent of the global economic recovery is still being underestimated; it should broaden and deepen in the next few months, having thus far been driven by consumption in the US and production and investment in Europe and China. China remains key within emerging markets for many reasons. India has now also emerged as a contender for investors looking to diversify regionally. We believe there is further upside for equities, although this might be more muted following the strong gains in the last 12 months.
Rising Consumption: Boom time ahead
In light of the magnitude of the US administration’s fiscal stimulus package, we believe that an economic boom is in the making. In addition to the stimulus measures, as the vaccination roll-outs progress and lockdown measures are gradually lifted, pent-up demand is expected to be released into the economy. Even during an economic boom, markets can become choppy every so often. So it ultimately tends to pay off to keep one’s feet on the ground.
Sustainable Investing: More than a feel-good investment
Investor interest in companies with a strong environmental, social, and governance (ESG) background received an additional boost when the pandemic struck. And these companies delivered, showing that their responsible business practices made them more resilient in a suddenly worsening business environment. Evaluating sustainability has become an integral part of any investment analysis. Incorporating such non-financial information may improve our ability to identify risks and opportunities, ultimately yielding superior investment returns.
Adaptive Companies: Getting fit for the future
Companies that quickly adapted to the new circumstances as the pandemic broke out can now reap the benefits of comparative advantage. Adaptive businesses are able to increase productivity and respond more swiftly to changing client needs and market developments. Such firms are well-positioned to outperform. Some of these companies can be found within our Next Generation universe, which covers the themes that we believe represent the most promising trends for the coming years.