As 2020 is coming close to an end, time has come for us to share our house view for 2021 and on the back of this, how we think best to position one's portfolios into the new year. In this memo, we will delve deeper on the trends we are seeing, the outlook we gathered from the various research publications (both from global banks as well as independent research houses) and our house view across the main asset classes. However, before we move to those discussions, we would like to share the top consensuses shared by these research publications we have come across:
- The first one is that most banks anticipate the economic situation to improve in 2021 and market to remain "reasonably" well oriented next year. The new motto "Do not short the recovery" is obviously echoing the more familiar motto of "Do not fight the FED" - a valuable lesson few investors have learnt at their own expense. It is commonly accepted that availability of vaccines, stronger growth in 2021, and continued loose monetary policies are likely to translate into higher equity and credit valuations, strength in cyclical stocks, a weaker US Dollar, and higher commodity prices.
- Secondly, China is a topic covered in all papers. What was once considered as part of an Emerging Markets play, China has now become a key, standalone component of any professionally managed portfolios.
- Last but not least, ESG, digitalization and decarbonization are the key themes commonly cited across the 2021 forecasts as being the growing trends and are likely to weigh more significantly when designing portfolios going forward.