Credit Suisse has warned that COVID-19 will be a “turning point” for investors as the global economy experiences sweeping structural change in the wake of the pandemic.
While geopolitics and trade spats are likely to be an ongoing feature of the world post-COVID-19, the true danger – and opportunity – is at home. With the cost of living on the rise, and people more concerned than ever before about housing and retirement, Credit Suisse believes that now is the time for “inclusive capitalism”.
“We find that popular frustration is focused more clearly on issues at home, in particular inequalities, rather than on perceived outside threats and a move toward protectionism,” said Daniel Rupli, head of single security research, equity and credit at Credit Suisse. “The coronavirus pandemic has, if anything, shown that the real emerging threats are global and require multilateral cooperation, as well as individual protection. Anger has now ceded to anxiety.”
Credit Suisse believes the companies to watch now are those providing solutions to the lower costs of basic needs, like healthcare and housing, and companies providing reskilling and upskilling. Companies that already continuously upskill their workforce have greater talent sourcing and retention, as well as increased productivity.
Credit Suisse also highlighted those companies that are positioning themselves to weather global climate change and the transition to renewables, including automobile manufacturers offering electric vehicles and companies working on sustainable fuels such as biofuels and hydrogen. Further into the future, Credit Suisse expects vertical farming and gene-editing technology to take off, while plant-based food product providers will reap the benefits of decreased meat consumption.
“The outbreak is also having an impact in terms of carbon and nitrogen dioxide emissions, as they decline in cities and industrial areas across Asia and Europe compared with the prior year,” said global chief investment officer Michael Strobaek. “This development underscores the link between human activity and climate change, and could precipitate the decarbonisation of economic growth going forward.”
Also on the rise are drone-driven services, including food and parcel delivery; the use of artificial intelligence in the development of new drugs; and massive spending on new infrastructure.
“Our normal way of life has ground to a halt because of the coronavirus pandemic,” Mr Strobaek 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.”