2021 GLOBAL OUTLOOK
A new investment order
We have entered a new investment order. The Covid-19 pandemic has accelerated profound shifts in how economies and societies operate across four dimensions: sustainability, inequality, geopolitics and the joint macro policy revolution. We believe this calls for a fundamental rethink of investment portfolios – starting now.
01 The new nominal
We see stronger growth and lower real yields ahead as the restart accelerates and central banks limit the rise of nominal yields – even as inflation expectations climb. Inflation will have different implications to the past. Strategic implication: We underweight government bonds and see equities supported by falling real rates.
02 Globalization rewired
Covid has accelerated geopolitical transformations such as a bi-polar U.S.-China world order and a remaking of global supply chains – placing greater weight on resilience and less on efficiency. Strategic implication: We favor deliberate country diversification and above-benchmark China exposures.
03 Turbocharged transformations
The pandemic has added fuel to pre-existing structural trends such as an increased focus on sustainability, rising inequality, and the dominance of e-commerce at the expense of traditional retail. Strategic implication: We prefer sustainable assets amid a growing societal preference for sustainability.
Reference: Blackrock
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