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Market: Climate, metaverse…Here are tomorrow’s 6 super trends to play for Credit Suisse

(Bahrain Financial Exchange) – While it is very difficult to predict the future, it is possible to determine future trends in certain sectors of activity. Credit Suisse has identified six “super directions” for investing in the coming years. The document titled “Supertrends 2022” provides long-term opportunities for investors in sectors that are expected to experience strong growth.

Five years after its launch, Credit Suisse’s Supertrends – or Long-Term Investment Trends – continues to focus on long-term and multi-year societal trends that can create opportunities for rapid business growth. Companies with high potential for future growth relate to the following topics: “anxious societies,” infrastructure, technology, advanced economies, millennial values, and climate change. Of these, not only the topic of climate change was included in the first report Supertrendspublished in 2017 by Credit Suisse.

To create its list of long-term investment trends, Credit Suisse drew on the 17 United Nations Sustainable Development Goals (SDGs). This new framework will help investors prioritize their investments according to their goal, whether for example to combat climate change (Goal 13), reduce inequalities (Goal 10), promote economic growth and decent work for all (Goal 8) or promote health and well-being (Objective 3).

The recent market volatility associated with the Russian invasion of Ukraine has not significantly affected the long-term condemnation of all Supertrends, although some short-term catalysts tend to favor certain major trends identified by Swiss bank experts. In 2021, ‘infrastructure’ and ‘climate change’ trends will particularly benefit Credit Suisse from large-scale infrastructure projects, as well as political support for climate action at major events such as COP26.

This year, however, investors should expect lower returns, according to Credit Suisse, as companies and consumers grapple with inflation at its highest level in decades. We designed Supertrends To transcend economic cycles and provide investors with multi-year equity investment opportunities,” said Michael Strubek, chief global investment officer at Credit Suisse.

Societies are ‘eager’ to confront social ills

The first direction that Credit Suisse chose relates to so-called “anxious” companies. It addresses inequality, particularly in access to housing, education, health care and personal safety. Thus, the companies identified by Credit Suisse management teams have a positive impact on society and aim to alleviate social ills.

Companies that help reduce costs for basic needs such as food and housing, encourage rehabilitation/development of employees, or provide solutions for personal safety, hygiene and cybersecurity, are the ones to watch. Swiss credit. Swiss bank experts emphasized that “the recent rise in inflation has led to the emergence of new difficulties in access, especially in terms of housing and food, paving the way for societies that are able to meet these challenges.”

“Geopolitical tensions at the beginning of the year brought the ‘Personal Security’ sub-topic of ‘Our Anxious Communities’ back to center stage. Cybersecurity in particular remains the main conviction, as do the ‘Accessibility’ and ‘Security’ sub-topics. recruitment,” they add.

Another “super trend” identified by Credit Suisse, is the rise of companies in the infrastructure sector. 2022 should be the starting point for a “multi-year boom” in a sector that should be stimulated by increased public spending on new infrastructure programs in the United States and Europe. Credit Suisse recalls in this sense the $1.2 trillion infrastructure plan approved by the US Congress in November 2021. This program focuses on transportation modernization, and should benefit construction companies. “Inflation is a somewhat positive factor for the infrastructure sector, since contracts for transport companies and regulated water/gas/electricity services contain a price index clause (linked to the CPI or sector-specific inflation gauge),” Credit Suisse notes.

Technology stocks and population aging

For tech stocks, on the other hand, inflation is far from a blessing. The reason for the recent stock market crash was in the technology department. Despite these headwinds, Credit Suisse believes the digital revolution is “not over yet”. The emergence of new digital worlds such as the metaverse, in the eyes of experts, will generate new opportunities. “Investments in digital marketing, production, sales and distribution in the metaverse are expected to increase as the population of this virtual world expands,” Credit Suisse says.

Companies that produce software or are associated with the deployment of 5G, artificial intelligence, virtual reality and the metaverse mentioned above remain long-term bets for the Swiss bank. Generations Y and Z will increasingly integrate the metaverse into their daily activities, predicts Credit Suisse, who also anticipates the emergence of companies offering privacy and data protection solutions as consumers become more aware of its importance.

The aging of the world’s population is also one of the main trends identified by Credit Suisse. The number of elderly people is expected to double to more than two billion people in 2050. This demographic development will create demand but will also be a source of challenges for Swiss bank experts. Major changes are expected in the housing, healthcare, insurance and consumer markets…

Among the players to watch, Credit Suisse specifically looks at biopharma, medical, and life sciences companies that treat disorders affecting older adults through innovative products (RNA therapies or antibody conjugations and medications), providers and operators of “good” seniors housing. Administration”. Managers also cite health and life insurance companies, private wealth advisors, and wealth managers with strong price bargaining power, as well as consumer goods companies that focus on the basic needs and specific wants of older adults (tour companies, beauty product manufacturers).

Credit Suisse experts point out, “Older people are a strong consumer group with significant purchasing power, reflecting the accumulation of wealth over their lifetime as well as inheritance received around retirement age, another effect of increased longevity.”

The interest of the new generation in metaviruses and the transmission of energy

At the other end of the age pyramid, Credit Suisse managers prefer companies that provide services in line with the new values ​​and habits of the younger population (millennials). For them, the younger generation is ready to integrate the metaverse into their daily activities and will disrupt the sales, advertising, media and financial sectors. Credit Suisse managers prefer companies aligned with Millennium values ​​of fun, health and entertainment and a focus on emerging markets, both global and Chinese brands.

Companies that know how to tap into the environmental conscience of some millennials were also included in the Credit Suisse selection. These companies are developing in areas such as biodiversity and climate protection, healthy and sustainable food, responsible consumption and production, and clean energy. A recent survey conducted by Credit Suisse Research Institute revealed strong concern among young consumers (particularly in emerging countries) about environmental issues.

Furthermore, Credit Suisse has incorporated the challenge of climate change into its challenges Supertrends in 2020 after noting the accelerating changes in consumer behavior, production processes in societies and actions taken by governments to limit climate change.

The theme of climate change brings together leading companies in the field of renewable energies (wind, solar, water, etc.) and suppliers of other technologies for the production and storage of electricity without carbon dioxide emissions, or companies that are mastering carbon capture technology and working to improve blue and green hydrogen production capabilities . Meat processors with low greenhouse gas emissions, as well as suppliers of plant-based food products, are also in Credit Suisse’s choice.

For the Bank, the recent rise in energy prices should contribute in the short term to the abandonment of fossil fuels for electricity production and transmission. The experts add: “The global food system, which is responsible for more than 20% of global greenhouse gas (GHG) emissions, is also in the process of reducing carbon emissions and providing long-term opportunities for a wide range of sectors.”

Sabrina Sadeghi

© 2022 BFM Bourse

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