1. Global economy is expected to grow faster than analysts’ and investors’ estimates. Many still neglect the fact that the first wave of the pandemic had economic consequences that have never existed before and that at another time would have led to a multi-year recession, such as the 1930s and 1940s following the Great Depression of 1929. This time governments are determined to support a change in the economic model, because they see this as the only viable model in the future.
2. The environmental and social impact of investments had only been theoretical until the outbreak of the pandemic. The pandemic, though, reinforced this trend and lead to a spectacular increase in investment funds that invest in Green Energy sectors and in general investments that leave a strong environmental footprint. The investments requirements for the energy transformation reach $ 22.5 trillion until 2050. (πηγή: IRENA.org).
This is a doubling of investment funds compared to investments so far. The energy giants of the future will have nothing to do with the ones that exist today. This has already began to come true. Green energy giants Iberdrola and NextEra are seeing their capitalization grow, while at the same time ExxonMobil and BP shrink.
3. The extremely low interest rates are expected to be maintained for a long period of time, as they are necessary for the evolution of the economy and at the same time are a prerequisite for economic stability and the avoidance of a new recession. Simply said, low interest rates make positive returns possible through the whole economic activity spectrum, away from zero or negative return positions. In such an environment, capital seeks positionings in growth sectors (future development) rather than in static sectors dominated by historical corporations.
4. Earnings per share, but also the “correction” of valuations will record a sharp increase. The pandemic and the first quarter’s panic have triggered some investment “discrepancies”, which are likely to be eliminated during 2021. There is no better example of this than the companies that belong to the real estate industry and which even today are in a huge discount in relation to the value of their assets. “Wrong” valuations can be detected in a lot more companies and big fund managers have already taken advantage of such opportunities. Especially in real estate sector, in the current week has been recorded new positionings’ traffic. This does not make an impression when there are REITS with discounts of up to 70% and strong balance sheets or even large credit lines.
5. In order to handle the deep impact of the pandemic, governments have set up emergency Recovery Funds to help countries overcome the economic downturn. This time, in addition to the fact that the money is plentiful, there is a clear plan for the direction that these investments should take. Simply put, investors cannot ignore where governments are investing this money in, because they will miss out on the opportunity to invest in the highest-yielding sectors of the next years.