(BFM Bourse) – While it is very difficult to predict the future, it is however possible to identify future trends in certain sectors of activity. Credit Suisse has identified six investment “super-trends” for the coming years. The document titled “Supertrends 2022” offers investors long-term opportunities in sectors that are expected to see strong growth.
Five years after their launch, Credit Suisse’s Supertrends – or long-term investment trends – continue to focus on long-term, multi-year societal trends that can create opportunities for rapid business growth. Companies with high potential for future growth are linked to the following themes: “anxious societies”, infrastructure, technology, senior economy, millennial values and climate change. Of these, only the theme of climate change was not included in the first report Supertrendspublished in 2017 by Credit Suisse.
To establish its list of its long-term investment trends, Credit Suisse based itself on the 17 United Nations Sustainable Development Goals (SDGs). This new framework will help investors prioritize their investments according to their objective, whether it is for example to fight against climate change (SDG 13), to reduce inequalities (SDG 10), to promote economic growth and decent work for all (SDG 8) or to promote health and well-being (SDG 3).
The recent market volatility linked to Russia’s invasion of Ukraine has not significantly affected long-term conviction on all Supertrends, despite the tendency of certain short-term catalysts to favor certain major trends identified by the experts of the Swiss bank. In 2021, the “Infrastructure” and “Climate Change” supertrends particularly benefited Credit Suisse from large-scale infrastructure projects, as well as political support for climate action at key events such as the COP26.
This year, however, investors should expect lower yields, according to Credit Suisse, as companies and consumers struggle with inflation at its highest level in decades. “We designed our Supertrends to transcend economic cycles and provide investors with multi-year equity investment opportunities,” said Michael Strobaek, Global Chief Investment Officer at Credit Suisse.
Societies “anxious” to respond to social ills
The first trend selected by Credit Suisse concerns so-called “anxious” companies. It addresses inequalities, particularly in the accessibility of housing, education, health care and personal safety. The companies identified by Credit Suisse’s management teams thus have a positive impact on society and are intended to alleviate social ills.
Companies that help reduce the costs of basic needs such as food and housing, encourage employee re-skilling/development, or provide solutions for personal safety, hygiene and cybersecurity, are ones to watch for. Swiss credit. “The recent surge in inflation has given rise to new difficulties of accessibility, especially in terms of housing and food, paving the way for societies capable of meeting these challenges” underline the experts of the Swiss bank.
“Geopolitical tensions at the beginning of the year have brought the ‘Personal Security’ sub-theme of our Supertrend ‘Anxious Societies’ back to the fore. Cybersecurity in particular remains a central conviction, as do the ‘Accessibility’ and ‘Security’ sub-themes. employment,'” they add.
Another “super trend” identified by Credit Suisse, the rise of companies in the infrastructure sector. The year 2022 should be the starting point for a “multi-year boom” in a segment that should be stimulated by the increase in public spending on new infrastructure programs in the United States and Europe. Credit Suisse recalls in this sense the 1.2 trillion dollar infrastructure plan adopted by the American Congress in November 2021. Focused on the modernization of transport, this program should benefit construction companies. “Inflation is a rather positive factor for the infrastructure sector, since the contracts of transport companies and regulated water/gas/electricity services contain a price indexation clause (linked to the index of consumer prices or a sector-specific measure of inflation),” notes Credit Suisse.
Technology stocks and the aging population
For technology stocks, on the other hand, inflation is far from a blessing. It was the cause of the recent stock market rout on the technology compartment. Despite these headwinds, Credit Suisse believes the digital revolution is “far from over.” The emergence of new digital worlds such as the metaverse will, in the eyes of experts, generate new opportunities. “Investments in digital marketing, production, sales and distribution in the metaverse are expected to increase with the population of this virtual world,” says Credit Suisse.
Companies that produce software or are linked to the deployment of 5G, artificial intelligence, virtual reality and the aforementioned metaverse, remain long-term bets for the Swiss bank. Generations Y and Z will increasingly integrate the metaverse into their daily activities, predicts Credit Suisse, which also expects the rise of companies offering solutions for privacy and data protection, as consumers become more aware of their importance.
The aging of the world population is also one of the major trends identified by Credit Suisse. The number of seniors is expected to double, reaching more than two billion people in 2050. This demographic development will create demand but will also be a source of challenges for the experts of the Swiss bank. The main changes are expected to occur in the housing, healthcare, insurance and consumer markets…
Among the players to watch, Credit Suisse is particularly looking at biopharmaceutical, medical technology and life sciences companies that treat disorders affecting the elderly with innovative products (RNA therapies or antibody-drug conjugates), providers and operators of “well run” senior housing. Managers also cite health and life insurance companies, private wealth advisors and wealth managers with strong price negotiating power, as well as consumer goods companies focused on the needs of basis and the specific wishes of seniors (tourism companies, manufacturers of beauty products).
“Senior citizens are a powerful consumer group with significant purchasing power, which reflects the accumulation of wealth over their lifetime as well as the inheritances received around retirement age, another effect of the increase longevity”, note the experts of Credit Suisse.
The interest of the new generation for the metaverse and the energy transition
At the other end of the age pyramid, companies that offer services in line with the values and new habits of the younger population (millennial generation) are preferred by Credit Suisse managers. For them, the younger generation is ready to integrate the metaverse into their daily activities and will disrupt the sales, advertising, media and financial sectors. Businesses that align with millennial values of fun, health and leisure and focus on emerging markets, both global and Chinese brands, are favored by Credit Suisse managers.
Companies that know how to take advantage of the ecological conscience of certain millennials have also been included in the selection of Credit Suisse. These companies are evolving in areas such as biodiversity and climate protection, healthy and sustainable food, responsible consumption and production, clean energy. A recent survey by the Credit Suisse Research Institute reveals the strong concern of young consumers (especially in emerging countries) for environmental issues.
Moreover, Credit Suisse has integrated the challenge of climate change into its Supertrends in 2020 after observing an acceleration of changes in consumer behavior, the production processes of societies and the actions taken by governments to curb climate change.
The theme of climate change brings together leading companies in renewable energies (wind, solar, water, etc.) and other suppliers of technologies for the production and storage of electricity without CO2 emissions, or companies mastering the technology of capture carbon and working to improve blue and green hydrogen production capacities. Meat processing companies with low greenhouse gas emissions, as well as suppliers of plant-based food products, are also in the selection of Credit Suisse.
For the bank, the recent rise in energy prices should contribute in the short term to the abandonment of fossil fuels for electricity production and transport. “The global food system, responsible for more than 20% of global greenhouse gas (GHG) emissions, is also in the process of reducing its carbon footprint and offers long-term opportunities for a wide range of sectors”, add the experts.
Sabrina Sadgui
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