Citing “unprecedented” economic upheavals caused by the COVD-19 pandemic, Credit Suisse announced updates to its framework for understanding long-term market trends and making high-conviction equity investments.
This framework, the Credit Suisse “Supertrends” report, upholds the core components of the original five investment trends while adding a sixth, which focuses on the economic effects of climate change.
Since its launch three years ago, the Supertrends has focused on multi-year socio-political, economic, and environmental shifts that the financial services company has identified as predictive of rapidly improving investment opportunities. Since these shifts are, by nature, fluxional, the Supertrends report is regularly updated in response to global phenomena. The latest report takes into consideration the consequences of the COVID-19 outbreak.
“Our normal way of life has ground to a halt because of the coronavirus pandemic,” Michael Strobaek, the Global CIO, said. “This crisis is challenging existing systems and structures, sowing the seeds for further change ahead as we uncover limitations in how we learn, work and live. Our Supertrends continue to evolve with the changing world around us.’
The updated trends involve climate change, economic inequality, aging populations, infrastructural development and technological innovation.
The climate change trend takes into account the recent move of many companies to reduce their carbon output and greenhouse gas emissions, a priority that has gained traction due to the COVID-19 outbreak’s reduction in GHG production throughout the world.
The trend on “inclusive capitalism” responds to the increasing prevalence of political unrest and national protectionism emerging in societies marked by economic inequality. The pandemic has exacerbated or exposed many of these tensions.
The Supertrends’ focus on aging populations notes that these demographics will drive investment opportunities in sectors geared toward catering toward these markets.
The trend on infrastructure notes that spending in this sector remains bullish due to urbanization; low interest rates should drive investment, too.
The update to the technological development trends refers to the new challenges presented by COVID-19 and the likelihood that these new problems will spur investment in new areas dedicated to solving problems wrought by the virus.
Lastly, Credit Suisse noted that the millennial generation increasingly emphasizes responsible consumption and sustainability. As a result, the company introduced a focus on food production the environmental impact of this sector into this area of the Supertrends report.