There is a worldwide discussion among investors regarding two questions. The first is whether the portfolio is protected from the drastic economic shock caused by Covid-19 – the strength of the company’s balance sheet, cost flexibility, long-term or even structural demand, and margin protection. On the other hand, especially after this economic shock, the current situation of the investment landscape needs to be examined. According to the asset manager Michael Nicol, co-manager of the Kames, five topics are of interest.
- The technology sees itself far ahead. Especially during the pandemic period, technology was accessed, such as working and communicating with customers, suppliers and colleagues via home office. The virtual world undoubtedly seems to be fast, available and reliable. As technology develops, so does business productivity and efficiency.
- ESG investments are also becoming increasingly important. Sustainability is increasingly the most important aspect of a company’s investment case. Social and governance policies, the demand for cleaner and more effective services and products, as well as for renewable energy will become increasingly important. Passive „value“ investors will also have to follow suit here.
- Automation must not be ignored either, as companies gain more flexibility in planning costs and capacities through automation.
- As the outsourcing of important production abroad led to trade problems, there is also talk of de-globalisation. Risk reduction of supply chains should be prevented.
- Health care spending must not be forgotten either. Insufficient capacity and resilience of health care systems have been exposed by the pandemic. Changes must be made to the existing social contracts between the public and health sectors.
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