Tuesday 29 September 2020

10 themes for the next 10 years

DUBAI, November 12, 2019

Up to 800 million people could be facing the threat of job automation and the environment could on the brink of catastrophic change, said the Bank of America Merrill Lynch (BofAML) in its latest Thematic Investing report.

BofAML has identified 10 themes for the next 10 years to help investors navigate the decade of megatrends:

1.     Peak Globalization: the end of unrestricted free movement of labour, goods, and capital around the world. Winners: local markets, real assets; Losers: global markets.

2.     Recession: record numbers of FMS investors think the global economy is late-cycle, the bond market bubble is set to unwind and populism is likely to be inflationary. Winners: inflation, real assets, infrastructure; Losers: growth, credit, deflation.

3.     Quantitative Failure: monetary policy measures are proving less and less effective at boosting corporate and household "animal spirits". Winners: Keynesianism, gold; Losers: financial assets, Monetarism.  

4.     Demographics: the number of grandparents will outnumber the world's children; every second 5 people enter the EM middle class and Gen Z overtakes Millennials. Winners: eCommerce, new consumer; Losers: bricks & mortar, legacy consumer.

5.     Climate Change: investors are more focused than ever on global warming's impact on the economy, society, unemployment and migration. Winners: clean energy, electric vehicles; Losers: fossil fuels, diesel cars, single-use plastics.

6.     Robots & Automation: up to 50 per cent of jobs at risk of automation by 2035. Winners: automation, local production, big data & AI; Losers: humans, global supply chains.

7.     Splinternet: China to overtake the US and become the world leader in AI by 2030. 'Sovereign internets' expand. Winners: emerging markets/the East; Losers: developed markets/the West.

8.     Moral Capitalism: $20 trillion of AuM is going into ESG strategies over the next 20 years = nearly market cap of S&P500. Winners: ESG, impact investing, stakeholders; Losers: business-as-usual investing, solely profit-maximizing firms.

9.     Smart Everything: 500 billion connectable devices by 2030 to combat deflationary demographics but at the risk of the death of privacy. Winners: IoT, connectivity, smart cities, 'big brother tech'; Losers: privacy, offline.

10.  Space: tourism and nanosatellites are the next frontier for an industry that could be worth c$1 trillion by 2030. Winners: aerospace & defence; Losers: legacy satellites. – TradeArabia News Service


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