Credit Suisse updates long-term investment trends against the backdrop of the unprecedented Covid-19 pandemic. finews.asia reveals the six key findings.
Credit Suisse has just published its annual update to the Supertrends, its framework for high-conviction, long-term thematic equity investments. While the Covid-19 pandemic has upended the global economy, the latest update has reconfirmed the core aspects of the bank's five original investment trends. Moreover, a sixth trend was added to focus on climate change.
Launched three years ago, Credit Suisse’s Supertrends focuses on multi-year societal trends believed to lead to fast-growing business opportunities. Each of the investment trends identifies opportunities expected to outperform as a result of these shifts. That said, the key societal, political, economic, and environmental issues they touch upon are in continuous flux, and today’s updated report also considers the changes brought about by the Covid-19 pandemic.
The updated long-term investment trends, first introduced in 2017, are outlined below:
1. Climate Change
Decarbonizing the economy is based on the investment case for companies that contribute most effectively to the transition to a less carbon-intensive world economy. The recent economic lockdown caused by the Covid-19 pandemic has reduced man-made greenhouse gas (GHG) emissions substantially in several regions – a clear signal of what the world could achieve in the future by creating a carbon-free and more sustainable global economy.
The key sectors that this investment trend focuses on are carbon-free electricity production, transportation, oil and gas transition pioneers, and agriculture/food production.
2. Anxious Societies
Inclusive capitalism reflects the fact that popular discontent is now focusing more clearly on issues at home, in particular inequalities, rather than on perceived outside threats and a move toward protectionism. Anger has now ceded to anxiety. With a newly created index, Credit Suisse keeps track of whether anxiety is receding or increasing.
The Covid-19 pandemic has shown that the real emerging threats are global and require multilateral cooperation, as well as individual protection.
3. Silver Economy
Investing for population aging: The aging population is likely to continue to drive business opportunities and investment performance for many years to come. In particular, population aging in emerging markets (EMs) will unfold at a speed not yet realized by most.
4. Infrastructure
Closing the gap: Infrastructure spending remains on the verge of a boom phase. There are gaps everywhere as old economies struggle to address both existing as well as new needs, including a drive towards greater sustainability. At the same time, new economies continue to urbanize at a fast pace.
The expectation of lower, and sometimes even negative, interest rates for an extended period should provide the right incentive for investment. As climate change concerns have attracted broad public attention, powerful regulatory and political catalysts should add further momentum to this theme.
5. Technology at the Service of Humans
Ongoing technological innovation, as well as the challenges uncovered by the coronavirus crisis, continue to make technology a compelling sector for investors. The drivers for this investment theme – in terms of demand as well as technological progress – remain powerful and firms in this theme’s areas of focus should benefit in the coming years.
6. Sustainability
This topic remains a key theme for «millennials’ values» including responsible consumption, and CS applies an environmental, social, and governance (ESG) overlay to its entire stock selection.
With health also at the top of the millennial agenda, there is a growing demand for healthy, sustainable food: the planetary diet. Hence, along with the transition to a circular economy, the bank incorporates sustainable food into this investment topic.
