Mapping today’s financial landscape
With the pandemic upending the business landscape, what are the investment trends that we should look out for?
One thing that is certain, we know that adjusting to changes can be challenging. Be it planned or unplanned, gradual or sudden, change is inevitable and very much part of being human. For almost a year now, we have experienced an unprecedented shift in our way of life due to Covid-19. We have reluctantly let go of our old normal and are now settling into what seems to be our new normal. There will be economic damage, but people are learning how to cope and businesses are adjusting. Many lessons will be learned and firms that survive will be more resilient and productive. Even when society starts up again post-pandemic, there will still be restrictions. In reality, we are facing fundamental shifts to our way of life.
It is a worrying time for many individuals and businesses from both a health and economic perspective. But what the coronavirus crisis has shown is that people and organisations can be innovative, adaptable and resilient. Many companies moved quickly to keep pace with customers’ new demands by dramatically scaling up their digital footprints – including those from sectors not traditionally associated with online platforms. With the vaccines now being rolled out, the consumer economy is recovering as people slowly return to their daily lives. Rekindling growth in consumption is an absolute priority for policymakers, particularly as the global economic outlook continues to darken. An understanding of the broader economic outlook will be crucial for the future.
It is increasingly clear that the current downturn is different from recessions of previous decades. We are experiencing not merely another turn of the business cycle, but a restructuring of the economic order. Undoubtedly, the business landscape has changed fundamentally; tomorrow’s environment will be different, but not less rich in possibilities for those who are prepared.
CHARGING AHEAD
2020 was nothing if not an unusual year, with a seemingly endless stream of twists and turns, and yet it seems to be green lights ahead for the bulls who have been driving global financial markets.
Bitcoin is up over 500 per cent since January 2020; the S&P500, which started the year hitting an all-time high on February 19 – and despite suffering the fastest decline in history from that all-time high (30 per cent in 22 days) – is up another 8 per cent above the peak. Gold, long considered to be a favourite when it comes to ‘safe haven’ assets or hedging assets investors flock to in times of instability, reached a new all-time high last year peaking above $2,030 an ounce and is currently sitting at a year-to-date return in excess of 23 per cent.
BITCOIN – THE DIGITAL GOLD
Even the most bullish of bitcoin advocates could not have foreseen its meteoric rise in such a short space of time. Cryptocurrencies like bitcoin and ethereum have indeed proven resilient. Bitcoin is a goldmine for those who know how to juggle between risk and profit from minute to minute. Investor interest, both retail and institutional, in digital currencies, has risen dramatically in recent months. What will be next after the coin’s 2020 bull run? Some remain bullish – CitiBank’s forecast places bitcoin at $318,000 by the end of 2021, while others stay on alert that it could crash similar to January 2018. The heyday of cryptocurrencies may have come and gone, but it’s also possible that the crypto market still has a lot of upsides to go. We do know one thing for sure: cryptocurrencies were once positioned to upend the entire financial system. That kind of noise doesn’t disappear overnight, so expect to hear from bitcoin for another year at least.
WHAT NEXT?
the world adapted to a radical shift and this euphoria is expected to continue as vaccines begin rolling out across the globe, indicating a potential return to a “normal” way of life. However, we also gained some very valuable lessons that we should hold on to long after we move out of this phase. Key among those lessons is our need to maintain a strong connection with one another and the importance of making your money work for you.
For brands and businesses, it is imperative that they strategise for this post-crisis future and create a roadmap for success going forward. Accelerating their digital transformation and recalibrating their corporate purpose around the values embraced by consumers during the health crisis will be key.
For some organisations, near-term survival is the only agenda, while others are peering through the fog of uncertainty, thinking about how to position themselves once the crisis has passed and things return to normal. The question is, “What will normal look like?” While no one can say how long the crisis will last, what we find on the other side will not look like the normal of recent years. The new normal will be shaped by a confluence of powerful forces – some arising directly from the Covid crisis and some that were at work long before it began.
Through it all, technological innovation will continue and evolve at a faster pace, and the value of increasing human knowledge will remain undiminished. For talented contrarians and technologists, the next few years may prove especially fruitful as investors looking for high-risk, high-reward opportunities shift their attention from financial engineering to genetic engineering, software and clean energy.
While moving from one transition period to another, it is crucial to have a trusted partner with a proven track record to help you navigate the uncertainty that lies ahead. For over a decade, AIX Investment Group has operated under a model of corporate sustainability that has proven to be resilient during these turbulent times.
Luck favours the prepared mind. With all the uncertainty, one thing is certain, that times ahead of us are going to be tough, for individuals and businesses alike.
In such a scenario, we are confident we can assist in your financial planning and help you generate passive income for a brighter future.
While 2020 was a year of new and challenging experiences adopting to a different way of life overnight, markets have bounced back and seem to be stronger than ever