SCB Julius Baer Securities Co., Ltd. has revealed its 2021 Year End Market Outlook highlighting critical factors affecting investment before this year comes to a close. According to the report, the global economy is entering a mid-cycle phase with returning inflation. Confidant that the global market still has strong growth prospects over the long term, SCB Julius Baer shares its views and investment tactics covering four main trends: 1. Mid-cycle Opportunities; 2. Fixed Income - Be active, Be selective; 3. Next Generation - In Focus Now; and 4. Resilient Companies - The Secret of Success.
In sharing his economic and investment prospects, SCB Julius Baer Head of Investment Advisory & Solutions Joseph Caceres stated that, "Based on Julius Baer's 2021 Year End Market Outlook, we find that the COVID-19 pandemic lasting over eighteen months has affected every sector, leading to dramatic changes in economic and social conditions and leaving the entire world facing inevitable challenges. For the remainder of this year, a flash recovery will offer mid-cycle opportunities following QE tapering, but this doesn't mean the economy will stop expanding. While economic stimulus measures are being pulled back, accommodative monetary and fiscal policies will help support the rise of stock markets. Stock markets in developed countries are still attractive and investors should go for high-growth stocks with an added defensive touch to reduce volatility."
Major investment trends to consider in the last quarter of 2021 are:
- After a flash recovery, growth consolidation is in store - leaving scope for mid-cycle opportunities.
- Accommodative policies and productivity gains will lead to strong post-pandemic growth rates.
- In equities, go for growth and add a defensive touch - we upgraded Swiss stocks and reiterated other calls like Healthcare, IT, financial, and dividend stocks for income.
- As Chinese government intervention remains uncertain, we shift our focus to Asian quality compounders outside of China.
- We believe that active duration management is the key to mastering the sharp moves in bond yields driven by high uncertainties and rapid changes in investor positioning.
- In a mid-cycle slowdown, the tide will no longer lift all boats even as upgrades should still outplace downgrades. We recommend sticking to moderate credit risk overall but becoming more selective on a single name level.
- A forward-looking investment approach is paramount to identifying the winners of longer-term structural trends.
- We focus on three attractively valued themes that we think have the wind at their backs:
1) Circular economy
2) Healthy living
3) Future mobility
- Companies across the world are exposed to the winds of change sweeping through their markets.
- We take a closer look at those companies whose robust approaches enable them to survive and even thrive in the harshest environments.
- These resilient companies, found across industries, demonstrate high pricing power; a growth pattern that is largely independent of the economic cycle; and generally, disruption-free supply chains.
Mr. Caceres concluded, "Based on these four trends, we believe that there are still investment opportunities during the current situation, especially in high growth segments and stocks revolving around future world trends. However, investors should diversify their investment risk in various products. SCB Julius Baer has an Expert Advisory Team with investment expertise and experience offering wealth management advice meeting Julius Baer's standards. Our teams are ready to provide advice and support our clients with managing their portfolios with flexibility to create sustainability in the long term,".