Inhabitants development, ageing and urbanisation in rising markets are long-term funding (LTI) themes that would assist traders hedge in opposition to the present bear market amid mounting international financial uncertainty, a report by Swiss wealth supervisor UBS has stated.
UBS expects the three LTI traits to “endure over the following seven to 10-year financial cycle” and outperform the broader market, it stated in its annual Thematic Information.
“With financial and political uncertainty so excessive and market volatility elevated, we predict now’s the time to consider long-term investing,” UBS stated on Thursday.
“After the sell-off in growth-oriented shares this yr, many long-term themes are cheaper to enter than this time final yr.”
Geopolitical and financial uncertainty is growing around the globe, pushed by quite a few components which have considerably slowed development momentum, the Worldwide Financial Fund reported.
In July, the IMF lowered its development forecast for the worldwide financial system for the second time this yr, as Russia’s warfare in Ukraine continues to gasoline inflationary pressures and disrupt the momentum of the restoration from the Covid-19 pandemic.
The IMF now initiatives international development at 3.2 per cent in 2022 and a pair of.9 per cent in 2023, after a 6.1 per cent enlargement final yr.
World financial uncertainty has additionally elevated volatility in monetary markets, which fell into bear territory earlier this yr after a 13-year bull run.
“Main central banks have additionally began tightening the reins of financial coverage resulting from excessive inflation, negatively impacting the valuation of long-duration property, whereas financial development issues are souring investor sentiment even additional,” UBS stated.
In Might, a quarterly survey by UBS discovered that rising inflation and the Russia-Ukraine warfare are key issues for high-net-worth traders globally.
Within the UAE, 33 per cent of traders plan so as to add to their portfolio if inventory markets decline additional, whereas one other 30 per cent will shift their investments to completely different sectors, the UBS survey stated.
Whereas investor sentiment has dipped, it is very important give attention to methods in a “world of change” that may assist traders to determine future development in markets, UBS stated within the Thematic Information.
“Our themes stay extraordinarily related at present and permit us to look past the short-term noise,” it added.
“This yr’s sell-off in growth-oriented shares — that are represented in lots of long-term themes — has opened a possibility to begin to construct positions,” UBS stated.
The LTI ageing theme covers sectors similar to robotics, automation, well being care, medical units and well being know-how, whereas inhabitants development affords funding alternatives in power effectivity, agriculture and schooling, together with distant studying, the report stated.
In the meantime, urbanisation in rising markets can be pushed by altering dwelling requirements and a shift within the steadiness between agriculture and manufacturing, UBS stated.
“This inhabitants shift drastically modifications the demand for housing and meals processing; shifts water use patterns; alters transport and communication hyperlinks; and has implications for well being care, schooling and public infrastructure,” it stated.
Nonetheless, the disrupter to all three LTI themes can be know-how and the modifications it’ll deliver to society, UBS added.
“Technological change, as a disruptive change, is tough to foretell with certainty. What’s essential is that long-term investments have the pliability to adapt to the results of technological change.”
Up to date: September 10, 2022, 4:50 AM
