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While nations are still in the throes of battling the coronavirus pandemic and it is premature to say when things could return to normal, we at UOB Asset Management took a stab at assessing what the investment landscape might look like post COVID-19.
First up, we expect that the wheels of globalisation would spin in reverse with the world more divided into siloed economic blocs. The pandemic has exposed the dangers of tightly-linked global supply chains.
In a deglobalised world, we expect a manufacturing renaissance in the developed markets and more localised supply chains.
With developed markets enacting huge monetary and fiscal stimulus, we expect financial markets to remain vulnerable to frequent bouts of volatility swings as asset bubbles build up.
The divide between developed markets and their weaker peers will widen. Emerging markets will struggle to keep up with interest payments as healthcare costs pile up amid crumbling economies.
Corporate balance sheets will turn more conservative with returns metrics such as return on equity (ROE) likely to decline.
The days of taking on debt to pay dividends or buy back shares are behind us.
Sustainable investing with ESG as a focus will remain an enduring investment trend even as concerted action on climate change gets put on the back burner.
Pockets of investment opportunity exist. These include companies in technology, media and telecommunication, as well as e-commerce. Travel-related businesses and oil and gas industries will take a longer time to recover.
To find out more and how you can invest for the future, we invite you to read our investment paper and refer to UOBAM.com.sg/Covid-19insights for more of our perspectives.