The top investment trends shaping the post-covid-19 world

 

The investment world will never be the same.

The beginning of the year 2020 is characterised with an unanticipated event that will have profound consequences for the decade to come. The Covid19 outbreak is an unprecedented crisis that has stopped world economy for several weeks and will durably reshape consumers’ behaviour and the way in which business activities are carried out globally.

Hindering a large part of the economic activities of most countries, the first effect of the pandemic has been a sharp decline in value of most financial markets with the notable exception of less liquid assets.

Secondly, the closing of the borders and the restrictions on individuals’ mobility has brought light to underestimated vulnerabilities of western countries towards globalization.

The responses of the government that committed several trillions in stimulus plan is going way further than the economic precepts of Keynes and dubbed the supporters of extremely loose monetary policies.

The pandemic has created a new social norm among people, distanciation that advocates keeping a minimum distance between individuals.

While world leaders in many countries reiterate that the world would never be the same after the Covid19, Investae has been researching and analysing the profound trends which are likely to shape the investment world in the coming decade These new paradigm will have a direct and long-lasting impact on the way investors should manage their asset allocation.

 

Recession proof investments

The consensus among the economists predicting the upcoming recession is quite broad. Some predicts recession duration may not be more than 6 months while others see no recovery before 2022. Though both arguments measure the impact at different extent, implicitly it is evident that the absence of economic activities in some sectors as well as the redefinition of consumers’ preferences will have an impact on economic activities as well as performance outcomes.

Lasting economic recession implies the tightening of credit policies from financial institutions. In other words, availing the financial credit will be harder in the coming months. The rise in unemployment rate will also have an impact on real estate as some renters may have increasing difficulty to pay their rent. We also expect a decline in the real estate market, with the notable exception of the middle class real estate market.

 

How to invest?

Bridge financing, often in the form of a bridge loan, is an interim financing option used by companies and other entities to solidify their
short-term position until a long-term financing option can be arranged. Investment funds offering credit, financing or bridge loans as well as companies offering leasing solutions should provide interesting opportunities to investors, as the world will be looking for financing.

Low middle class real estate happens to be a good protection against the difficulty renters will have to pay their rent. When the recession hits, low-middle class real estate find a pool of potential renters from the superior class. Moreover Multi family real estate complex can help investors to diversify their portfolio of assets, and thereby mitigating the potential risk.

 

What types of investments are available?

  • Specialized investment funds in credit financing.
  • Private debt financing multi family real estate.
  • Private debt financing a leasing company.

 

Monetary Expansion

World economies’ response to the looming recession has been an unprecedented monetary stimulus in terms of money supply. As of our
knowledge, at present, already 5,000 million dollars have been committed to spur economic growth. We believe this monetary policy will have profound influence on the market interest rates as well as the quantity of money supply. As a result, in certain cases there will be an appreciation of some particular assets, as well as an increase of consumption at the expense of savings. In other words, the economies will be smoothening towards a consumption path with effective demand. Economies will start living beyond their means.

 

How to invest?

  • Luxury goods and services, luxury travel and experiences may benefit the most from monetary expansion.
  • Gold and prime real estate will also benefit from the increase in the quantity of the monetary mass.
  • Passion investment such as classic cars, rare whisky will see their price soaring in the coming decade. These assets do not pay dividends or coupons but investors should be aiming at the capital appreciation of the underlying assets.

 

What types of investments are available?

  • Specialized investment funds in prime real estate.
  • Specialized investment funds in art.
  • Private debt financing rare whisky. Golf course.

 

Climate Change

We believe that climate change issues will still be at the top agenda of the world economies. The US election in 2020 or 2024 will prompt a new beginning of the Paris Climate agreement along with the participation of the United States. The demand for ESG investment options has risen so high that asset managers scramble to provide new funds. As of 2020, ESG funds account for more than $30 trillion worldwide in assets under management based on the study by Global Sustainable Investment Alliance (GSIA). Financial instruments where the proceeds are used to finance or refinance, in part or in full, activities, projects or assets that will contribute to environmental sustainability are to be looked at.

 

How to invest?

  • Renewable energy technologies are the most promising sector.
  • Green bonds.

 

What types of investments are available?

  • Private debt financing hybrid cards.
  • Private debt financing renewable technology.

 

Protection & Localism

This unexpected global pandemic has shed the light on your vulnerabilities as individuals. We expect a global awareness to spring from these events. Consumers will be more attentive at the source of the production line. We expect them to turn to local production and local markets. The Covid-19 crisis will give rise to an increase in demand in the new for advisory.

The new norm of distanciation (or social distancing often termed) will increase the reliance of business through online platforms but also it poses the potential challenge to be vigilant against cyber crimes and identity thefts. We expect a surge in cyber security.

Some sectors may benefit directly from the need for protection the health sector is the most obvious one.

 

How to invest?

  • Local food Hall markets competing with supermarkets was already a trend among consumers before the crisis, we believe this trend will
    continue and accelerate.
  • Cyber security is defined by the protection of computer systems and networks. The fight against cybercrime offers substantial opportunities to investors.

 

What investments are available?

  • Private debt financing Market Hall (Food hall).
  • Fintech advisory wealth services to HWNI and UHWNI.
  • Investment fund financing cyber security SMEs.

 

(Investae).

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