Beyond the recovery from COVID-19, sustainability will be at the centre of the next cycle for both investors and monetary authorities, the investment chief of AXA has said.
Chris Iggo, chief investment officer at AXA Investment Managers has reflected on the “three big busts” of the past decade, believing the technology bust, GFC and the recent COVID-19 shutdowns will all play a role in how the coming decade evolves.
“Accompanying the economic developments, inequality has worsened, and the biosphere has become more damaged,” Mr Iggo said.
“Nativism and populism have increasingly dominated the political agenda – even seen with vaccines.”
Is the COVID recovery an opportunity to reset, the CIO pondered.
“The recent evidence of excessive greed-driven risk-taking in financial markets doesn’t sit well with a zeitgeist that is more ‘woke’ – and I mean that in the most positive way,” Mr Iggo said.
“Care for the planet and people is increasingly at the heart of an emerging political and business agenda.”
Central banks are also expected to play a role in their activities going forward, no longer just simply buying bonds and setting cash rates.
“The assets they do buy, the development of digital currencies and the assessment of more social factors in the economic environment can all make contributions to a fairer and more inclusive society,” Mr Iggo said.
“They also need to be tough. The world does not need over-leveraged wannabe ‘Masters of the Universe’ nor the institutions that facilitate the kind of behaviour that can create volatility in markets, wealth loss and the misallocation of resources.”
The coming weeks will confirm if a recovery is in force – which if it is, the “shape of the world going forward will be the focus of investors”, Mr Iggo said.
“Sure, the impact of pent-up consumer spending and business investment should continue beyond the end of this year, as will more generous fiscal policies,” he added.
“However, at some point the marginal impact of these will ease and new factors will become important for investors.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].