Have we seen the best of China growth in 2021?
Many European companies have benefitted from the faster economic recovery in China to date, but how long will it continue?
Opportunity has sprung from the Covid-19 adversity
Does the path to freedom signify an economic boom?
Time for a new value/growth investment approach
Is value judgement still relevant in economic recoveries?
Why investors need to be ‘humble’ about making inflation predictions in H2
The journey to higher inflation
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The World in 2030
Predictions for long-term investors
This isn’t science fiction
Life-changing innovations and their investment potential
Exploring some of the next decade's key investment prospects
Why the future is a lot closer than you might imagine – investment opportunities today
Capital Group on the benefits of long-term investing
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Technology innovation over the next decade
Why the semiconductor super cycle could power the next decade of growth
Inflation uncertainties after July’s blip
Long-term economic dislocation or a temporary market check?
If the 2010s was an era for technology titans, the 2020s may see health care take the lead
Are modern medical ‘miracles’ set to advance health care investment trends?
Inflation is set to head higher after July’s blip
From vaccine technologies to digital payments, change is on its way
Will Covid-19 spark an era of innovation?
Riding around in a robotaxi is closer than you think
Are autonomous vehicles a fast-lane investment opportunity or a short-term overpromise?
Will Covid-19 spark an era of innovation?
Digitalisation and a growing middle class are driving change
Banks, insurers and financial exchanges:
The rising trio of emerging markets
Could purely domestic companies offer safe harbour?
Opportunity beckons for those that can avoid companies caught in US-China trade crossfire
Banks, insurers and financial exchanges: The rising trio of emerging markets
How can we think through the cloud value chain?
Beyond the cloud: Investing in the fourth industrial revolution
Technology is transforming traditional industries
Is tech-savvy as interesting as tech?
Cheaper, more efficient renewable technology is the biggest of three supportive tailwinds
Green revolution: Could falling renewable costs buoy up the sector into the future?
Endeavours to curb greenhouse gas emissions are gearing up, say Capital Group’s experts
Green revolution: Climate action and economic stimulus – a tailwind for renewables?
Endeavours to curb greenhouse gas emissions are gearing up
There could be social and economic value in bridging the digital divide
The digital divide: How big is the gap between some Americans and their future?
Cities may be about to re-invent themselves, say Capital Group’s investment team
The post-pandemic city: Might Covid-19 trigger permanent change?
Innovation springs from adversity, and the Covid-19 crisis is no exception. But to what extent is the world really changing when it comes to investment opportunities?
As we emerge from the dark days of the Covid-19 health crisis, the global economy appears to be on the road to making a significant recovery.
Consumers are cash rich and keen to start spending; and thanks to the rollout of effective vaccines, they now can in most parts of the world.
What’s more, this pent-up demand is underpinned by unprecedented levels of fiscal support over the past year. The International Monetary Fund (IMF), which recently more than doubled its 2021 US GDP growth estimate to 6.4%, are predicting a period of dramatic economic growth as a result.
There are encouraging signs both within and outside of the US, however, with a never-ending supply of interesting and innovative new companies that are positioned to capture growth in new areas. One of these is Southeast-Asia-based Grab, which is planning to go public via a record-breaking special purpose acquisition company (SPAC) merger with NASDAQ listed Altimeter Growth Corp. Though it was recently announced the merger had been delayed to Q4 2021.
“Companies such as Airbnb, which listed in December in the US, and taxi and delivery service Grab show that it is a continuing evolving universe and innovation can generate strong growth prospects,” Carlyle adds.
“When Pearl Harbor happened, the US artillery was 75% horse drawn. By the end of the war, they had entered the atomic age”
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Martin Romo, equity portfolio manager and research director at Capital Group
“Ten years from now, I think we will look back on Covid as our generation’s ‘Pearl Harbor moment’ – when extreme adversity spurs innovation to address some of the era’s biggest problems,” explains Capital Group equity portfolio manager Martin Romo. “When Pearl Harbor happened, the US artillery was 75% horse drawn. By the end of the war, they had entered the atomic age. Covid-19 could be the trigger that spurs us to tackle critical issues, such as healthcare and education, over the next decade.”
The IMF’s estimate does not mean that investors can necessarily look forward to a decade of positive stock market returns. While the market rebound over the past 12 months has been impressive, coming off a near 30% fall in some markets at the start of the pandemic, if we look at the 10 years to come, it’s difficult to see companies growing their revenue at 3% per annum, says Richard Carlyle, equity investment director at Capital Group.
Equity Portfolio Manager and Research Director at Capital Group
Equity Investment Director at
Equity Portfolio Manager at Capital Group
Chief European Economist at Capital Group
Adversity spurs innovation
Sectors that suffered during the pandemic, such as tourism and leisure, are also among those predicted to reap the rewards of a rebound in consumer spending.
“Our memories are marked by experiences, so I think travel and dining out will come roaring back,” says Capital Group equity portfolio manager Hilda Applbaum.
However, this bounce back has largely been priced into the markets already. Rather than favouring certain sectors, investment success therefore looks likely to hinge on spotting corners of opportunity – and recognising the companies that are exiting the pandemic stronger than they went in.
“We take a selective approach,” says Carlyle. “For example, we prefer companies in the Apple supply chain, such as TSMC and ASML, rather than the company itself.”
“Our memories are marked by experiences, so I think travel and dining out will come roaring back”
Hilda Applbaum, equity portfolio manager at Capital Group
Yet behind the investment opportunities there are the fiscal consequences of Covid-19 to consider, with many governments’ debt-to-GDP at the highest level since World War II.
“The sheer number of workers who now rely on the state, the scale of the bailouts, the skyrocketing deficits and debt all point to how fiscal conservatism has given way to a new paradigm,” says Capital Group’s political economist Talha Khan.
It also means economic growth could be repressed should inflation rise more quickly than expected, though.
Discussing the global macroeconomic environment, chief European economist at Capital Group, Robert Lind comments: “The reopening of economies is likely to trigger a pick-up in inflation… As inflation rises and as growth recovers, we could see some pressure on long-term interest rates.” And he concludes, “However, if we did start to see upward pressure on real interest rates, it would be harder for governments to fund these debt levels.”
The value/growth argument is fast becoming outdated as style rotations become difficult to predict in uncertain and volatile markets. Is it time for a new approach?
Historically a safe bet in times of economic growth, value stocks are enjoying a return to favour – despite years of lacklustre returns.
With tech-heavy growth stocks losing ground, and many of the industries hardest hit by the pandemic now rebounding strongly, received investment wisdom suggested it was value’s chance to shine – particularly as inflation concerns crept into the fold. And for a while value stocks certainly did:
According to Capital Group equity portfolio manager Martin Romo, whether you prefer a value or a growth investment approach, stock selection is always about assessing whether the current price of a security is “fair” relative to future expectations.
While value investing traditionally focuses on stocks that are “cheap” relative to fundamentals such as future earnings estimates, growth investing favours stocks that could produce higher-than-consensus earnings growth.
In other words, the two styles share an interest in evaluating the present value of a company’s future earnings, even though their emphasis on earnings estimates differs.
The development of value and growth as two distinct investment styles is based on historical data showing that periods of high returns for one approach are generally followed by periods in which the other approach is more successful.
“In the 1970s, for example, high-quality growth companies such as Pepsi, Gillette, Disney, Wal-Mart and Polaroid drove the “Nifty-Fifty” bubble and powered returns,” says Capital Group client solutions specialist Nisha Thakrar.
“But when the bubble burst, value outperformed growth, not only in the bear market but across the full downturn–recovery cycle.”
In the economic environment we find ourselves in today, however, style rotations have become more difficult to predict, which raises questions about whether investors can still rely on value stocks rising during periods of economic recovery.
In the US the Russell 1000 Value index steered ahead of the equivalent growth index by
3.3 percentage points in the
six months to 30 June 2021
Value vs growth
“But when the bubble burst, value outperformed growth, not only in the bear market but across the full downturn–recovery cycle”
Over the last decade, there have been some major secular changes that have increased risks within the value/growth framework.
These include that traditional value companies, such as banks, are facing difficulties that are unlikely to be resolved by a period of economic growth – in this case, tighter regulations and low interest rates.
In addition, value stocks have been hampered by a surge in digitisation and an increase in the importance of intangible assets such as customer loyalty, both of which mean a bottom-up approach is essential to understand a company’s true value.
Greater fluidity between growth and value stocks also means investors who restrict themselves to one style could miss out as a result.
“Take the connected health and fitness industry – where new technologies are beginning to shape every aspect of sport: data, performance and the user experience,” Thakrar says.
“An old economy stock like Nike has transitioned into the new economy, transforming its revenue growth and thus becoming a growth stock.
“This demonstrates that potential future winners can be found in both value and growth.”
The advantages of an “agnostic” approach
In more recent weeks, however, value’s run has seemingly stalled again, with the MSCI World Value index losing 1.34% in the month to 30 June 2021, just as its growth counterpart returned to peak form and delivered a gross monthly return of just under 5%.
Yet before investors take the opportunity to rotate back into growth stocks, there is reason to believe taking such a reductive view of the value/growth argument is in fact becoming outdated in today’s ambiguous economic environment.
Nisha Thakrar, client solutions specialist at Capital Group
“An old economy stock like Nike has transitioned into the new economy, transforming its revenue growth and thus becoming a growth stock”
Client Solutions Specialist at Capital Group
Following the breakneck pace with which Covid-19 vaccines were developed in 2020, innovative advances across the medical sector are creating new investment opportunities for investors
Developing a Covid-19 vaccine in under a year is undeniably an historic achievement for the global pharmaceutical industry.
Take the Pfizer-BioNTech vaccine. First conceived in January 2020 when genetic sequences of the virus were released; by mid-December 2020 it was being used to protect vulnerable members of society from the virus. When you consider it took more than 40 years to develop vaccines for Ebola and chickenpox, it is nothing short of a modern medical miracle.
“It’s no exaggeration to call these Covid-19 vaccines one of the greatest scientific accomplishments in our lifetimes,” says Capital Group equity investment analyst Laura Nelson Carney.
The question now is: can the health care sector produce more ‘miracles’ on this scale making the 2020s the industry’s time to shine?
In an age marked by global competition and rivalry, the Covid-19 vaccine effort was remarkable for the level of collaboration it engendered around the world. US biotech firm Moderna partnered with a division of the US National Institutes of Health to develop a similar vaccine, and UK pharmaceutical giant AstraZeneca worked with Oxford University to make its version.
The effort featured the cooperation of a range of companies, governments, and academia, with billions of dollars of upfront government funding allowing companies to implement many steps in parallel that they would normally do in sequence. At a broader level, the lightning speed with which Covid-19 vaccines were developed has shown what the health care sector can achieve.
And while we might not see the same level of government spending on such innovations in the future, Capital Group equity portfolio manager Rich Wolf, believes that advances in areas such as genetic analysis are paving the way for major breakthroughs in the treatment of various types of cancer, as well as massive potential profits for the companies that develop the drugs.
“Therapies derived from genetic testing have the potential to extend lives and generate billions of dollars in revenue for the companies that successfully develop them,” he said.
“It’s no exaggeration to call these Covid-19 vaccines one of the greatest scientific accomplishments in our lifetimes”
Covid-19: A global effort
“Therapies derived from genetic testing have the potential to extend lives and generate billions of dollars in revenue for the companies that successfully develop them”
Investment implications foreseen by Wolf and his colleague Laura Nelson Carney include a growing role for China – both as an end-user market and as a source of globally relevant innovation.
“We are already experiencing a massive wave of innovation across the health care sector that will drive new opportunity for companies, potentially reduce overall costs and, most importantly, improve outcomes for patients,” says Wolf. “Breakthroughs in diagnostics may lead to earlier detection of illnesses, or in some cases treat disease before it progresses.”
Rich Wolf, equity portfolio manager at Capital Group
Laura Nelson Carney,
Equity Investment Analyst at Capital Group
Laura Nelson Carney, equity investment analyst at Capital Group
Sources: Industry & government data, Kagan estimates, Standard & Poor’s. Data compiled June 2020. Values in USD.
Other chronic conditions
Revenue of remote patient monitoring devices
Wolf uses the example of genetic testing equipment maker Illumina and research and manufacturing company Thermo Fisher Scientific (TFS), which are providing services to a host of drug developers.
“One of the most exciting things is the liquid biopsy, offered by both Illumina and TFS, whereby a sample of your blood can be used to identify cancer at its earliest stages,” he adds, noting that while much of the recent focus on health care innovation has been on the pandemic and vaccine development, Capital Group has also been looking over the horizon, trying to determine how health care will transform itself and how we can invest in those shifts.
“If the 2010s were the era for technology titans (including the FAANGs) to lead markets and change the world, then the 2020s may well be the era when health care takes the lead,” he adds.
Source: Medical miracle: Health care innovation saves the world, Capital Group
The semiconductor industry has evolved from boom-and-bust cycles to become the key that will power technology innovation over the next decade. Capital Group’s Steve Watson reveals the potential of this new investment opportunity
The semiconductor industry is predicted to hit sales of around $1trn in 2030, up from $450bn in 2019.
Used in the manufacture of everything from your smartphone to your fridge, these increasingly ubiquitous chips are already hot property, with the World Semiconductor Trade Statistics organisation’s latest figures showing global sales of $43.6bn in May 2021, an increase of 26.2% year on year.
However, a perfect storm of supply and demand factors, following a surge in demand that is driven by changing consumer habits post-Covid-19, means there is a global semiconductor shortage. Ironically even Samsung, the world’s second-largest producer of chips, was forced to postpone the launch of its high-end smartphone earlier this year due to the shortage.
This is yet more evidence of the robust demand for chips across industries, that is only set to grow. Semiconductors are set to power the next decade of global growth - as much as the oil fuelled industrial economies did in the last century.
Investment Week and Professional Adviser spoke to Steve Watson, equity portfolio manager at Capital Group, to learn how the potential growth of this industry could provide investment opportunities in 2021.
Following several rounds of consolidation, the semiconductor supply chain is now dominated by a few companies.
These highly specialised companies already had a considerable competitive advantage over potential new entrants to the market pre Covid-19, but this has undoubtedly been boosted by the global health crisis.
By essentially forcing great swathes of the planet’s population into a virtual world , Covid-19 restrictions accelerated orders for semiconductors for smartphones, video game devices and home appliances.
As millions of people started working remotely, there was also a surge in demand for the chips used in personal computers, sales of which grew at their highest rate for 10 years in 2020.
The need to make more devices is not the only reason the industry became unable to meet demand, however. As car manufacturers cancelled their orders early in the pandemic, there was no capacity available when they reinstated them later in the year.
Semiconductors are set to power the next decade of global growth - as much as the oil fuelled industrial economies did in the last century
How has the semiconductor industry evolved over the past year?
“In my portfolios, I am interested in companies that may be misunderstood by the market but are working on transformative ideas to change daily life”
Steve Watson, equity portfolio manager at Capital Group
Source: Bloomberg. Data represents the share of all semiconductor device applications in 2025, as forecast by Bloomberg.
Uses for semiconductors (2025 forecast)
PC / Computer
Industrial / Government
Already essential to the manufacture of many possessions, by 2030 semiconductors could be ubiquitous across most consumer touchpoints, from belts to salt cellars.
Corporations, governments, and industries are transitioning to 5G technologies, artificial intelligence (AI) and cloud-based solutions, also there is a growing need for data centres to store the ballooning amount of data we create and consume every day. In my view, this is likely to drive production of even more advanced chips over the next five years.
Their growing omnipresence also makes semiconductors strategically important at a political level, where they are increasingly seen as a national security priority.
Why are semiconductors so integral to the global economy?
Governments in the US and China want to reduce dependence on foreign manufacturers, while in Europe officials are concerned about a lack of manufacturing capabilities that has, for example, hit German car makers during the current shortage. This political interest is evidenced by investment in the industry, such as when the US senate recently approved a $52bn payment to the domestic semiconductor industry. Whether public policy imperatives affect the industry’s efficiency, is a trend we will be closely watching.
From an investment perspective, over the next decade I expect chipmakers could be working overtime to satisfy the robust demand across industries. In my portfolios, I am interested in companies that may be misunderstood by the market but are working on transformative ideas to change daily life.
How will the importance of semiconductors impact on global trade and investment opportunities?
Since it takes about four months to manufacture auto chips, we believe that situation is likely to correct itself by the end of the year. Elsewhere, semiconductor manufacturers are planning to spend billions of dollars on new facilities to meet the demand. For example, Taiwan Semiconductor Manufacturing has earmarked $100bn for new chip fabrication facilities through 2023, while Intel is planning a $20bn investment in two new plants in Arizona.
Does the shortage in semiconductors pose a challenge in the short-to-medium term?
While many are expecting post-pandemic inflation spikes in both the UK and US to be temporary, we talk to Capital Group about the possibility of it becoming a longer-term economic issue for investors globally
The cost of living is going up, with a combination of Covid-19 restrictions, pent-up demand, and ongoing government stimulus pushing the UK inflation rate to 2.5% in June 2021. Although July’s figures saw inflation cool to 2%, it is predicted the dip is unlikely to last and by November the figure could be closer to the Bank of England’s 4% forecast.
The good news is that on both sides of the Atlantic (US inflation hit 5.4% - the biggest year-on-year increase since August 2008) the figures reflect weaker-than-usual inflation this time last year, when much of the economy was out of action. But for investors, the question remains what impact inflation may have on asset classes.
Even though inflation may rise in 2021 again, Capital Group economist Robert Lind believes many of the current price pressures are likely to prove transitory.
“Despite higher prices for some raw materials and consumer products, signs of broader price inflation may be mostly short-term in nature and unlikely to produce sustained, long-term inflationary pressures,” says Lind.
Much of this will of course depend on how global central banks manage the withdrawal of the Covid-19 stimulus programmes underpinning many developed economies now.
But even as economic growth races ahead in many parts of the world – the IMF now expects the US economy to expand by 7% in 2021; while the Bank of England raised its annual growth forecast to an 80-year high of 7.5% in May –expectations for any sudden change in monetary or fiscal stimulus remain muted.
“The recovery has global policymakers on both the fiscal and the monetary side curtailing their Covid-19 stimulus,” explains Capital Group portfolio manager Pramod Atluri. “But for central bankers, in particular, that normalisation process will likely be gradual as they must consider the risk of upsetting the financial market as the recovery unfolds.”
A transitory stage
“The second half of 2021 and beyond is likely to be a more challenging period, but the importance of maintaining a balanced portfolio hasn’t changed”
For inflation watchers, the investment outlook remains murky. Rising inflation can mean investors feel safer with their money in cash or cash-like investments. However, this is not always a favourable investment strategy – as investors in money market funds found earlier this year.
According to Atluri, second quarter cash holdings missed out on positive returns in most bond sectors while taking a hit to purchasing power thanks to higher inflation.
The fund manager suggests taking a long-term perspective rather than reacting to those forecasting big, inflation-led interest rate hikes.
“The second half of 2021 and beyond is likely to be a more challenging period, but the importance of maintaining a balanced portfolio hasn’t changed,” Atluri said.
When it comes to equities, meanwhile, the picture is not all doom and gloom either.
A moderate increase in inflation, especially when economic growth is strong, has been known to reward equity investors. Historical data shows that inflation rates of between 3% and 4% have not prevented the S&P 500 index providing above-average gains in most years since 1946.
Pramod Atluri, portfolio manager at Capital Group
Economist at Capital Group
Portfolio Manager at Capital Group
IMF's prediction of how much the US economy will expand in 2021
The longer-term view
The annual growth forecast of the UK economy by Bank of England - an 80-year high
From vaccine technologies to digital payments, change is on its way according to Capital Group
There is no denying the dramatic impact Covid-19 has had on our lives over the past year and a half. But what does it mean for our future, specifically from an investment perspective?
Throughout history, there are countless examples of innovation springing from adversity. And this latest challenge is unlikely to break that mould.
We have already seen governments and the pharmaceutical industry come together like never before to fund and develop vaccines at record speed.
But Martin Romo, an equity portfolio manager at Capital Group, believes this is just the first of many advances the pandemic will trigger over the next five to 10 years; and it could be similar to many other historic periods of extreme adversity that have spurred innovation and behavioural change for decades.
For example, one domain in which Covid has already engendered massive change is in the uptake of digital payments, with the pandemic accelerating our journey towards a cashless society in ways many financial organisations could only dream of back in 2019.
“A decade from now, I think digital payments will be the norm, and people will give you odd looks if you try to pay with cash,” says Jody Jonsson, global equity portfolio manager at Capital Group. For investors keen to future-proof their portfolios, mobile payment technology could be an interesting area, she says.
“As consumers become increasingly comfortable with technology, companies with large global footprints could be poised to benefit,” Jonsson adds. “We’ve also seen strong growth in smaller companies outside the US that offer mobile payment platforms for merchants.”
“A decade from now, I think digital payments will be the norm, and people will give you odd looks if you try to pay with cash”
For equity portfolio manager Anne-Marie Peterson, such opportunities will be key for investors in the coming decade. “Change drives opportunity for active investors like us. Take retailers as an example. Historically, a big investment budget and IT department would be needed to run a retail operation. Now we are starting to see a wave of back-end infrastructure development with the potential to empower small- and medium-sized businesses by lowering the barriers of reaching customers and managing inventory. Online retailers will be launched in as little as 15 minutes. The bottom line is that we are living in an incredible time of change.”
Global Equity Portfolio Manager and Research Director at Capital Group
Jody Jonsson, global equity portfolio manager at Capital Group
Rest of world
Number of digital payment transactions
Source: World Payments Report 2020 from Capgemini. 2020–2023 are estimates. Figures reflect all non-cash payments. No third party whose information is referenced in this report under credit to it, assumes any liability towards the user with respect to its information.
Elsewhere, many businesses have recognised to what extent their affairs can be conducted remotely, from day-to-day catch ups to meetings with overseas clients and contacts.
As of April 2021, 145 million people around the world were actively using the communication and collaboration platform Microsoft Teams, according to analyst Statista. That’s up from 75 million in April 2020, just after the pandemic set in.
Employees too have recognised the advantages of working from home, with a recent report from consultant Accenture showing that 83% of workers now favour of a hybrid model that allows them to work remotely at least 25% of the time.
Lisa Thompson, another equity portfolio manager at Capital Group, expects this to have repercussions for a wide range of sectors. “As remote work becomes more common, I think we will see many people relocate to suburbs and smaller cities,” she says.
“This shift would have implications that span a variety of industries, not just office and commercial real estate in city centres. The restaurant sector, for example, may look very different in 10 years.”
Number of people around the world actively using Microsoft Teams in April 2020
Number of people around the world actively using Microsoft Teams in April 2021
Past results are not a guarantee of future results.
Global car makers are increasingly entering the autonomous vehicle space, steering self-driving cars away from the realm of science fiction and on to a road near you.
In recent weeks alone, Swedish manufacturer Volvo announced a new investment in an autonomous technology testing platform, whilst German automaker Audi unveiled details of its first ever self-driving car.
While equity portfolio manager Chris Buchbinder at Capital Group doesn’t expect us all to own self-driving cars by 2030, he does think we could be travelling by robotaxi within the next 10 years.
“I think in 2030 we will have broadly deployed fleets of autonomous electric vehicles operating in cities throughout the world,” he says.
“Ownership of a personal vehicle will go from being a necessity to a luxury. Many people will still have vehicles, but they will no longer be necessary as a primary form of transportation in major cities.”
On the flipside, however, self-driving vehicles are yet to fully win the public’s trust – and accidents such as the recent one involving a Toyota self-driving Paralympic bus do nothing to further this cause.
So how can investors capitalise on the rollout of autonomous vehicles, without putting themselves at risk of losing out when the sector hits bumps in the road?
Equity portfolio manager Steve Watson’s investment approach involves identifying misunderstood companies that are working on ideas that could transform our lives.
His take on the growth of the autonomous vehicle is therefore to focus on components necessary to their development, such as semiconductor chips.
“Cars are being equipped with more electronics every year,” he says. “The recent global shortage in automotive chips underscores the dependence the industry now has on chipmakers.
“And as vehicles become autonomous, they will require even more advanced components to make them safe and efficient.”
Buchbinder agrees that a range of tech companies stand to benefit from greater usage of self-driving cars.
“As vehicles become more about technological components and less about traditional manufacturing, winners will emerge from a variety of industries,” he says.
“I think in 2030 we will have broadly deployed fleets of autonomous electric vehicles operating in cities throughout the world. Ownership of a personal vehicle will go from being a necessity to a luxury”
Consider the components
“Cars are being equipped with more electronics every year. The recent global shortage in automotive chips underscores the dependence the industry now has on chipmakers”
As self-driving cars are mainly battery powered, there are also opportunities within the electric vehicle (EV) market, which has been pushed to full throttle by state-led environmental initiatives.
In the UK, for example, motorists will only be able to buy new hybrids or EVs from 2030, while only new EVs will be on sale from 2035, according to a recent government announcement.
“Global EV sales are expected to rise 28% a year over the next decade,” says equity portfolio manager Kaitlyn Murphy – but she adds that these estimates may be too conservative.
She explains: “As an investor, I am therefore also seeking companies with the potential to roll out subscription packages that include managing your battery, providing in-vehicle entertainment and improved safety, and also self-driving technology.”
Electrify your portfolio
Chris Buchbinder, equity portfolio manager at Capital Group
Past results are not a guarantee of future results. For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein.
Source: IEA, Electric vehicle stock in the EV30@30 scenario, 2018—2030, IEA, Paris. Data for 2020—2030 are forecasts, provided by IEA.
Electric vehicle fleet worldwide (millions units)
28% annualised growth
The growth of emerging market financial institutions is setting the stage for long-term economic progress in many countries across Asia.
From banks and insurers to stock exchanges, the financial sector is going from strength to strength in countries such as India, China, and Indonesia.
Here, we take a closer look at how the companies spearheading this movement are growing their businesses and gaining market share.
In India, large private banks have been increasing their presence, with HDFC Bank and Kotak Mahindra Bank taking advantage of the digitalisation of India’s economy to leverage technology to make faster lending decisions and reach customers in rural areas through mobile apps.
In Indonesia, Bank BTPN Syariah is also targeting customers in rural areas, specifically women on low incomes.
Indonesia’s middle class has exploded over the last decade or so; around a fifth of the population is now middle class, compared to just 7% 15 years ago.
“We’ve seen this trend for several years in developing countries where many consumers had no bank accounts but did have mobile phones and adopted mobile payment technology quickly”
The middle class is also burgeoning in China, as is the number of high-net-worth individuals. And the signs are that this trend will escalate over the next few years, with HSBC Holdings Plc forecasting that the 350-million-strong middle class will hit 500 million by 2025, and the number of Chinese millionaires will more than double to 5 million.
Equity analyst Lauren Carter agrees that China’s high-end buying power looks to be here to stay. “I believe China will remain a powerful source of growth in the luxury goods market in the years ahead,” she says.
Insurance and investing
Jody Jonsson, global equity portfolio manager and research director at Capital Group
Equity Analyst at Capital Group
Company examples and forecasts are shown for illustrative purposes only.
If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease. Currency hedging seeks to limit this, but there is no guarantee that hedging will be totally successful.
Depending on the strategy, risks may be associated with investing in fixed income, derivatives, emerging markets and/or high-yield securities.
…compared to just 7% 15 years ago
However, as is often the case in emerging economies, poor women living in rural areas are being left behind due to their lack of access to internet and financial services.
BTPN Syariah is taking steps to change this by empowering women in this situation via initiatives such as offering finance for their entrepreneurial ventures and partnering with universities to offer financial education and mentorship to help ensure the success of those businesses.
But women are not the only untapped markets in rural areas. As banking technology in emerging markets becomes more sophisticated, financial institutions should be able to offer services to more people.
Equity portfolio manager Jody Jonsson expects emerging markets to lead the charge towards a cashless society as digital payments become increasingly common around the world.
“This is one area where emerging markets are ahead of the US,” Jonsson says. “We’ve seen this trend for several years in developing countries where many consumers had no bank accounts but did have mobile phones and adopted mobile payment technology quickly.”
That’s good news for insurance providers such as AIA Group, which is capitalising on these societal changes by concentrating on offering better products and the higher level of service that high-end consumers demand.
“To build a sustainable business model, the company trains young agents to sell higher quality products. Their focus on rewards and recognition attracts more high-calibre candidates, while improving the brand in the eyes of customers,” says investment analyst Patricio Ciarfaglia.
For steady growth and reliable dividends, investors can also look to financial exchanges, which are at the centre of the expansion of the public financial markets in Asia, as well as other emerging markets such as Russia.
Forecasted number of Chinese middle class by 2025 (up from 350 million now)
The number of Chinese millionaires will more than double to 5 million
Around a fifth of Indonesia’s population is now middle class…
Chinese exports to the US have hit record levels over the past year, despite a US campaign to reduce the country’s reliance on imports from China by introducing tariffs and restrictions.
The sudden need for Covid-related products such as masks and PPE produced in China is undoubtedly one reason for this.
However, the pandemic has also heightened geopolitical tensions as it has highlighted China’s position as the largest global supplier of active pharmaceutical ingredients.
And even with Donald Trump no longer in the White House, President Joe Biden has made no moves during his first seven months in office to remove any of import duties and export controls introduced by the Trump administration.
Equity portfolio manager Chris Thomsen therefore expects the two superpowers to continue tussling over trade during the next few years.
“It’s not just geopolitics,” he says. “It will also have a direct impact on businesses as they are forced to take sides and perhaps adjust the way they operate on both sides of the fence.”
Here, we examine the business impact of continued ‘frostiness’ between the US and China – and zero in on some of the companies we expect to escape unscathed.
“Purely domestic Chinese internet companies aren’t going to be hurt by a trade war”
China is changing fast, with 14 million people becoming urban dwellers each year and more than 90% of the population expected to live in the country’s cities by 2050 – up from just 20% in the 1980s.
So not all companies need to look to international markets; there are already lots of exciting opportunities for those targeting domestic consumers.
Chris Thomsen, equity portfolio manager at Capital Group
Company examples and forecasts are shown for illustrative purposes only.
If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease. Currency hedging seeks to limit this, but there is no guarantee that hedging will be totally successful.
Depending on the strategy, risks may be associated with investing in fixed income, derivatives, emerging markets and/or high-yield securities.
The trade war between the US and China is now into its third year, if you include the hiatus caused by the pandemic.
Thomsen’s aim is to avoid companies that could get caught in the crossfire, while seeking out great investment opportunities at the same time.
As such, he believes Chinese internet companies such as Tencent, which is now also a dominant player in the global gaming market, are a good bet. “Purely domestic Chinese internet companies aren’t going to be hurt by a trade war,” he adds.
The internet space has been one of the most attractive investment areas. Although companies such as Tencent initially copied their peers, they have since evolved into incredibly sophisticated multifaceted platforms.
Evidence of this can be found in Tencent’s recent successes, including its WeChat Mini Program. This is a closed internet environment where users can access all businesses that operate within the WeChat app without downloading the apps themselves, which now houses more than a million apps.
Another area of interest for Thomsen is therefore the innovative start-ups, from a range of different industries, currently making waves in China.
“There is a new wave of innovative second- and third-generation companies run by dynamic entrepreneurs,” he says. “These companies, such as multi-service platform Meituan, have scaled up incredibly fast due to the size and technological sophistication of China’s market.
“Capturing these opportunities requires in-depth research, which can help us identify companies and industries that are aligned with the Chinese government’s policy priorities as well as those that have attractive long-term fundamentals.”
Number of Chinese citizens who become urban dwellers each year
“It’s not just geopolitics, it will also have a direct impact on businesses as they are forced to take sides and perhaps adjust the way they operate on both sides of the fence”
Of the population expected to live in the country’s cities by 2050
A growing number of non-tech companies are using technology to shake up traditional industries, driving change and investment opportunity in a variety of sectors.
So much so that global company spending on digital transformation is expected to hit US$2.4 trillion by 2024, according to Statista.
With FAANG (Facebook, Amazon, Apple, Netflix and Google) stocks running at high valuations and attracting regulatory scrutiny, is it time for tech investors to start looking at tech-savvy companies in other sectors?
Portfolio manager Anne-Marie Peterson thinks so. “Today all companies are tech companies,” she says. “Established companies are using tech to transform their businesses, creating significant investment opportunity. And I don't think these opportunities are fully understood yet.” So what examples are there of old-economy companies harnessing the power of new technology?
“Shifting energy priorities could provide a faster replacement cycle”
Leading retailers have recognised the importance of an omnichannel approach that incorporates physical stores, an online presence, and a buy online, pick up in store model.
Take US giant Target. Over recent years, it has improved its e-commerce offering, while also building a robust same-day delivery service and an in-store pickup option.
“The main change was the emphasis on in-store pickup and the de-emphasis on home delivery,” says Peterson. “Today, Target’s online business is quite profitable.”
Anne-Marie Peterson, equity portfolio manager at Capital Group
Company examples and forecasts are shown for illustrative purposes only.
Most people think cars are the biggest creators of carbon emissions. But buildings are actually the worst culprits, partly due to the inefficiency of heating and cooling systems (HVAC). Companies using tech to improve HVAC systems could therefore be on to a winning formula.
“Shifting energy priorities could provide a faster replacement cycle,” Peterson says. “This could be a tailwind for HVAC companies that can quickly introduce cleaner systems.”
Equipment maker Caterpillar has introduced various high-tech solutions, including a hybrid land drilling system, to help it and its customers meet global sustainability goals.
“One doesn’t often hear about Caterpillar being involved in the energy transition,” says equity analyst Gigi Pardasani, “but I came away from a recent demonstration of their latest technologies thinking that the inverse is true.”
Louis Vuitton owner LVMH has adopted a range of digital tools, including technology that enables consumers to track available stock and choose either same-day delivery or a store pickup – making it one to watch for portfolio manager Lara Pellini.
“E-commerce was disruptive for a lot of retailers, but it turned out to be a positive for LVMH,” she says.
“E-commerce was disruptive for a lot of retailers, but it turned out to be a positive for LVMH”
Lara Pellini, equity portfolio manager at Capital Group
While many restaurants struggled during the pandemic, pizza delivery giant Domino’s capitalised on its contactless delivery and car-side services, and its own online ordering system across all digital platforms.
Now, this and other advances are allowing Domino’s to maintain its gains in delivery as the economy reopens.
Not every company that embarks on a digital transformation will succeed long term; investors need to fully understand a company’s digital strategy to gauge its prospects for success.
“At Capital Group, we dig a little deeper across all industries to find companies with the potential to benefit from a digital transformation,” says portfolio manager Greg Wendt.
The bottom line
Expected global company spending on digital transformation by 2024
The cloud is poised to become the catalyst for the fourth industrial revolution, just as steam did in the first, electricity in the second, and technology in the third, according to Capital Group’s experts.
In their view, data storage capacity is just the beginning of the cloud’s transformative power.
“We are already seeing the tangible application of data mobilisation in apps like Google Maps,” says investment director Andy Budden.
“Map co-ordinates, satellite images, photos and data are all stored in the cloud, but the real potential only emerges when an artificial intelligence engine integrates, analyses, and synthesizes the layers of data and images into usable output. The result has transformed the way we get from A to B.”
Capital Group’s investment experts have categorised the companies they believe stand to benefit from this shift into three distinct groups: Enablers, Solutions, and Beneficiaries.
“Beneficiaries are companies that are using the cloud to revolutionise their industries, whatever they may be – from agriculture to renewable energy”
Beneficiaries are companies that are using the cloud to revolutionise their industries, whatever they may be – from agriculture to renewable energy.
The super-fast rollout of COVID vaccines is a great example of this in action; not only did the cloud allow scientists to decode the DNA of the virus much more quickly, it made this information available to immunology teams around the world, then it helped researchers select clinical trial candidates and understand the resulting data.
Some biotech companies have their own cloud computing and big data solutions and, going forward, companies servicing the healthcare sector with offerings that help biotech leverage the transformational power of the cloud may also increasingly benefit.
Andy Budden, investment director
Company examples are shown for illustrative purposes only.
Enablers, or companies making the components that build, power, and support the cloud, are already in high demand.
As we see broader migration and adoption, this demand will grow and evolve, benefiting sectors such as semiconductors, which are already key to the global economy.
Companies that Capital Group believes offer potential long-term value in this industry include equipment maker ASML – essentially the only manufacturer of the extreme ultraviolet lithography (EUV) machines used to make advanced chips – and manufacturer TSMC, which holds close to 80% market share for leading-edge chip production.
“We are already seeing the tangible application of data mobilisation in apps like Google Maps”
Solutions, or the companies delivering cloud technology to users, can be divided into two categories: infrastructure providers and software providers.
Infrastructure providers are currently mainly well-known names such as Amazon’s AWS cloud services, which has a 33% market share.
However, there is still room for new players to make their mark. In China, for example, Alibaba and Tencent currently have just 6% and 2% of the global market respectively but government policy in China, which is encouraging business to adopt the cloud, could help them to seize a much larger share over the next few years.
Software provision, meanwhile, is handled by more than 20,000 companies globally, less than 1% of which are valued at more than US$1 billion – making deep-dive research critical to investment success.
“There are several ways to capture market share in software,” says Budden. “One is to specialise in a particular sector and serve that market end-to-end as Adobe has.
“The other is to serve customers across a variety of industries like human resources platform Ceridian.”
Software provision is handled by more than 20,000 companies globally, less than 1% of which are valued at more than US$1 billion
Cheaper, more efficient renewable technology is the biggest of three supportive tailwinds, according to Capital Group’s experts
After three years of outstanding performance, European renewable energy stocks have had a tougher time in 2021. In early October, the European Renewable Energy Index was down more than 20% compared to the start of the year, despite recent gains. (1)
Longer term, however, Capital Group Investment Analyst Bobby Chada believes the sector’s prospects are still bright.
“In the short term, investor concerns about rising bond yields and inflation have dragged down the utilities sector,” he says.
“And a flood of cash into environmentally friendly investments in recent years has spurred fears of a green bubble. However, in my view, the fundamentals of Europe’s largest clean energy companies remain strong.” Here’s why.
Green hydrogen is seen by many experts as the key to decarbonising highly polluting industries such as steel. The bad news is that it remains one of the more expensive types of clean energy to produce; the good news is that here too, new technology looks set to send costs plummeting.
“If I map the improvements that are coming on the cost of the technology used to create green hydrogen, plus where the cost of clean energy is headed, I can see a really significant reduction in costs,” Chada says. “They could fall by as much as three quarters over the next five to 10 years.”
Bobby Chada, investment analyst at Capital Group
Investment Analyst at Capital Group
Despite its recent underperformance, the renewable energy sector is propelled by three important secular tailwinds: the “Green Trifecta” of falling renewable costs, new energy policies, and economic stimulus.
The dominant, largely European-based, players also have a range of advantages, including strong development pipelines and development teams, significant scale benefits, robust balance sheets to fund investments, and vertical integration that new entrants typically struggle to match.
“A flood of cash into environmentally friendly investments in recent years has spurred fears of a green bubble. However, in my view, the fundamentals of Europe’s largest clean energy companies remain strong”
The average cost of clean power generation – looking across onshore wind, offshore wind, or solar photovoltaic – generally drops every year by around 10% to 15%. (2) And as companies scale up and new technology comes online, costs could continue to fall.
“Take offshore wind,” Chada says. “Machines are getting bigger. Technologies to install and to build turbines are changing rapidly and the supply chain is evolving.”
Companies making the most of such technological advances include Denmark’s Ørsted, which has carved out a leading position in offshore wind by developing internal engineering, operation, and maintenance skills.
“This is still an immature industry, and companies are consistently learning how to operate more efficiently,” Chada adds.
The amount by which the average cost of clean power generation – looking across onshore wind, offshore wind, or solar photovoltaic – generally drops every year
10% to 15%
While some investors have become warier of renewable energy companies due to fears of a bubble, others are concerned about growing pressure from traditional energy giants such as BP and Shell.
However, Chada argues that today’s renewable majors, which include EDP, Enel, Engie, Iberdrola, and Ørsted, are well placed to defend themselves against big oil companies that have only recently started to invest seriously in renewables.
“I believe the market is growing fast enough that there will be room for all,” he adds. “It will be hard to match the existing skills, scale and pipelines of the renewable majors.”
Skills and scale
Click here for more information on the green revolution and how renewables may be set to benefit from government climate action and economic stimulus.
(2) Source: Green Revolution report, UN Environmental Program; International Renewable Energy Agency
(1) As at 12 October 2021.
Source: Société Générale
(1) As at 12 October 2021. Source: Société Générale
Countries around the world are accelerating their clean energy strategies, with even longstanding climate laggards such as the US and China making major commitments, and this autumn’s United Nations (UN) Climate Change Conference (COP26) advancing the cause.
Alongside falling renewable energy costs (and continuing volatility in carbon-based energy such as natural gas), these fundamental factors may continue to provide a tailwind for clean energy companies.
In many countries, much of the pandemic relief funding being made available has strings attached that require it to be used in ways that will cut carbon.
The European Investment Bank, for example, has already pledged to stop providing money to fund fossil fuel projects and is expected to increase support for renewables projects that are close to financial completion.
And in Asia, the Asian Infrastructure Investment Bank has also identified green infrastructure as a top post-pandemic recovery theme.
“The momentum to decarbonise the world economy is powerful and enduring enough to drive historic changes,” Chada adds. “That means, in my view, it could be time to stop thinking of utilities as staid, stodgy value investments that do not produce double-digit growth.”
The potential for a post-Covid boost
Government leaders have been talking about climate change for years. Yet little progress has been made on decarbonising the global economy since the UN’s Paris Agreement came into effect in 2015.
Now, however, warnings such as the recent Intergovernmental Panel on Climate Change (IPCC) paper showing that, even in a best case scenario, global warming is likely to reach 1.5 degrees Celsius by 2040, seem to be sinking in. (1) And investment in the renewable energy sector was tipped to soar as a result.
“Even the International Energy Agency (IEA), an organisation that has historically significantly underestimated renewables growth, now appears to realise the scale of what is needed to avert a climate disaster,” says Investment Analyst Bobby Chada, citing a report the IEA put out earlier this year. (1)
“Even the International Energy Agency, an organisation that has historically significantly underestimated renewables growth, now appears to realise the scale of what is needed to avert a climate disaster”
Green energy is moving up the agenda
As the climate change warnings get starker, governments around the world are increasing efforts to meet their commitments.
US President Joe Biden has launched a new energy plan, while the European Union (EU) – a clean energy leader – is taking steps to source half of its energy from renewables by 2030 and cut greenhouse gas emissions to net zero by 2050.
To achieve this, the EU may need to invest as much as €7 trillion in the next 30 years from a mix of sources including private investment, around half of which is expected to go to renewables, electricity grids, battery storage and similar businesses.
“For utility companies, this means growth,” says Chada. “And that makes the sector more attractive than has historically been the case.”
A global solution to a global problem
The EU may need to invest as much as €7 trillion in the next
30 years from a mix of sources including private investment, around half of which is expected to go to renewables, electricity grids, battery storage and similar businesses
Past results are not a guarantee of future results. For illustrative purposes only.
Click here to explore further on the green revolution, discussing the impact of another key fundamental – falling renewables costs.
(1) Source: Green Revolution report, UN Environmental Program; International Renewable Energy Agency
Tap here for more information on the green revolution and how renewables may be set to benefit from government climate action and economic stimulus.
There could be social and economic value in bridging the digital divide, say Capital Group’s investment team
Up to 79 million Americans may not use fixed broadband, according to estimates based on the 2019 American Consumer Survey. (1) That’s a big problem, when everything from employment opportunities to health care is increasingly dependent on being able to get online using a high-speed connection.
The challenge has become known as the “digital divide”. And in the post-Covid world, its impact is more pronounced than ever. What may be surprising is the extent of this divide in a technologically sophisticated nation like the US. Social, demographic and geographic factors all impact on digital access.
Some American broadband providers are working to narrow the gap by connecting unserved and underserved households, for example, in rural areas. By doing so, they are helping to provide a brighter future for millions of people, improving economic prospects in these regions and creating sources of new revenue.
Capital Group’s proprietary Environmental, Social and Governance (ESG) investment framework for broadband providers recognises the importance of this issue. Analysts systematically consider how company management teams approach society’s digital divide. Getting this right could support equitable economic development, potentially acting as a tailwind for essential industries like telehealth, education, agriculture, real estate and financial services.
Connectivity is so important to being able to fully function in modern society that the United Nations declared internet access to be a fundamental human right in 2016
Whether you want to work or study, access to a fast, affordable internet service is essential. Connectivity is so important to being able to fully function in modern society that the United Nations declared internet access to be a fundamental human right in 2016 – long before Covid-19 made a high-speed connection even more critical to everyday life.
The social and economic costs of the digital divide in the US are difficult to estimate but add up to many tens of billions of US dollars, from causes that include lower productivity, higher health care costs and decreased economic resilience.
Meanwhile, the digital divide is not evenly spread: Black/African American and Latin/Hispanic households are among those with the lowest broadband access.
The connectivity gap
Up to 79 million Americans may not use fixed broadband, according to estimates based on the 2019 American Consumer Survey
Past results are not a guarantee of future results.
This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein.
Existing funding to help overcome the digital divide includes the Federal Communications Commission’s Rural Digital Opportunity Fund (RDOF; US$20.4 billion over 10 years), as well as government subsidies to help prevent affordability being a barrier to broadband adoption.
But this could be just the tip of the iceberg. The Biden administration’s American Jobs Plan called for US$100 billion (2) to close the broadband gap, and even the negotiated version passed by the US Senate earmarked US$65 billion for this purpose. (3)
Capital Group analysts therefore believe some US broadband providers have the opportunity to earn a compelling return, supported in part by federal subsidies, by addressing accessibility, affordability, and digital literacy among lower-income customers. The Capital team have built models examining capital expenditure, the number of expected new subscribers, and available subsidies for broadband providers to help identify companies that can sustainably connect unserved customers and support equitable economic development.
Increasing federal funding
(1) Source: United States Census Bureau. “Types of Computers and Internet Subscriptions.” American Community Survey, 2019. Figure was calculated by assessing number of households (without an internet subscription, with a cellular data plan only, and dial-up only); adjusted for total people using data from average size of U.S. household in 2019.
(2) Source: The White House, “Fact Sheet: The American Jobs Plan.” 31 March 2021.
(3) Source: Andrew Duehran, “Senate Passes Bipartisan Infrastructure Bill.” The Wall Street Journal, updated 10 August 2021.
The Biden administration’s American Jobs Plan called for US$100 billion (2) to close the broadband gap
Being confined to their homes during the pandemic made many city dwellers crave a more rural setting with outdoor space and fewer people around.
And despite many offices opening up in recent months, the trend towards hybrid working models that only require people to be on site some of the time has made living outside cities a more attractive proposition – pushing up suburban house prices.
If this shift away from city living gathers momentum longer term, it could have a marked impact on economies, financial markets and the future of large cities.
“From an investment perspective, we need to determine how durable these changes are, how they could affect consumer spending patterns and how companies may respond,” Capital Group economist Jared Franz says.
Research suggests that the remote working revolution prompted by Covid-19 will outlast the pandemic, at least if workers have their say.
According to the US National Bureau of Economic Research, more than 77% of employees who are able to work from home would like to work remotely at least one day per week. (1)
Capital Group’s Franz believes that roughly 25% of US employees could be working remotely by 2022, up from just 5% pre pandemic.
However, not everyone is on board with the work-from-home phenomenon. Some employers are pushing for a return to more traditional work schedules, while some employees feel isolated when working from home.
“From an investment perspective, we need to determine how durable these changes are, how they could affect consumer spending patterns and how companies may respond”
Jared Franz, economist at Capital Group
The rise of remote working
While some sectors will suffer if the pandemic has a lasting effect on working patterns and consumer behaviour, others are likely to prosper as a result of the “new normal”. For investors, the key is therefore to work out which companies will come out on top.
Areas that may potentially benefit if the deurbanisation trend continues include:
Winners and losers
Capital Group’s Franz believes that roughly 25% of US employees could be working remotely by 2022, up from just 5% pre pandemic
Forecasts shown for illustrative purposes only.
By contrast, it might mean tough times for sectors such as commercial real estate, which is already showing signs of strain; office vacancy rates in the US rose above 17% in the second quarter of 2021, up from roughly 13% in the first quarter of 2020. (2)
In US states with large urban centres, Capital Group portfolio manager Lisa Thompson believes state and local government finances could be impacted too.
“Deurbanisation puts a lot of pressure on states like New York and California that have relied on a very high tax base of wealthy people living in Manhattan, Los Angeles and San Francisco,” she says.
However, she also expects big cities to adapt and – ultimately – continue to thrive.
“I can remember when big cities were not places people wanted to go in the 1970s and 1980s,” Thompson adds.
“Today, older people may say, ‘I don’t need to be in the city anymore,’ but I think younger people will still want to be at the centre of civic life and entertainment. Cities will just reinvent themselves again.”
(1) Source: National Bureau of Economic Research working paper: ‘Why working from home will stick’, based on surveys of 33,250 respondents conducted from May 2020 through March 2021
Personal travel and leisure
Technology and communications
Home improvement industry and stores
Residential real estate — particularly in the suburbs
Fitness and outdoor activities
(2) Source: Cushman & Wakefield. As of June 30, 2021
“Deurbanisation puts a lot of pressure on states like New York and California that have relied on a very high tax base of wealthy people living in Manhattan, Los Angeles and San Francisco”
Lisa Thompson, equity portfolio manager at Capital Group