Shares, currencies, commodities: this is what investors need to know for 2021

Tuesday 29 December 2020

Stocks, currencies, commodities
Investors need to know that for 2021

The good news at the end of the year: stockbrokers see more opportunities than risks for the coming stock market year. Stocks should again be the big contributors to returns. Industrial metals such as copper and nickel are also likely to play a major role. On the other hand, caution is advised with bonds and foreign exchange.

The corona pandemic will remain a dominant topic on the stock exchange in 2021. However, experts are generally optimistic about the new year, as they anticipate a gradual return to normal thanks to mass vaccinations. "We currently see more opportunities than risks," says Ulrich Stephan, chief investment strategist for private and corporate clients at Deutsche Bank. "The economic recovery should continue after the difficult winter half-year."

Stockbrokers expect an additional boost from the expected US economic stimulus package in the fight against the corona crisis and the investment plans of future US President Joe Biden. In Europe, however, the threatened hard break between Great Britain and the EU could cause turbulence. Here is an outlook for selected asset classes:

shares

According to experts, the stock rally on the stock exchanges is likely to continue in the coming year if the current pandemic restrictions are eased and the global economy recovers. "In 2021, too, the music will be the loudest across the Atlantic and in China," says Rainer Weyrauch, manager of Fürst Fugger Privatbank. Wall Street has been rushing from record high to record high for weeks.

Emmanuel Cau from Barclays Bank believes that the European stock markets, which have so far lagged behind the US stock exchanges, will see new highs and a plus of 13 percent. "Central banks and governments still have enough arrows in their quiver to support the economic recovery," said the chief investment strategist for European stocks at Barclays.

Bonds

In the opinion of experts, investors should be selective when it comes to government bonds, because many of them barely moved due to the massive purchases of the central banks. At the same time, inflation could pick up in a strong economic recovery, warns portfolio manager Jaco Rouw of asset manager NN.

In this case, "linkers", whose return is linked to the rate of inflation, should develop particularly well. The analysts at Bank Credit Suisse write that hard currency bonds from emerging countries are also attractive. The same applies to corporate bonds.

currency

One of the problem children for foreign exchange investors is sterling, which is likely to remain under pressure longer term. "The British economy will be one of the last to recover, as Brexit will weigh on it in addition to the consequences of the pandemic," says Mark Dowding, chief investor at asset manager BlueBay. In addition, the Bank of England (BoE) is playing with the idea of ​​negative key interest rates, emphasizes LBBW analyst Elmar Völker. "Realistic chances of an implementation of this option exist especially in the event that the island's economy suffers further damage from the 'Brexit'."

But experts also expect a devaluation of the dollar. The prospect of a coronavirus vaccine and a recovery in the global economy make the world's reserve currency less attractive as a "safe haven", says analyst Ricardo Evangelista of the brokerage firm ActivTrades. Other stockbrokers point to the expected further cash injections from the US Federal Reserve and additional government stimulus programs. In addition to the economic recovery, these should also fuel inflation, although the Fed has made it clear that interest rate hikes are not an issue for the foreseeable future.

Precious metals

For the experts at the precious metal trader Heraeus, gold is about to make a comeback after the recent price setbacks. "The weak phase in the dollar should support the gold price in the long term. This will make the troy ounce cheaper for foreign investors." The potential rise in inflation will provide further tailwind, predict their colleagues from asset manager Robeco. But since this is also driving up bond yields and luring investors into bonds, the upward trend in gold & Co. will lose momentum.

Industrial metals

"As in this year, China should play a leading role next year," predicts Commerzbank analyst Daniel Briesemann. Copper in particular should benefit from the planned build-up of strategic metal reserves and the expansion of renewable energies. Another driving force is the hoped-for recovery of the global economy by overcoming the corona pandemic.

The price for aluminum, on the other hand, is likely to fall to 1900 from around 2000 dollars per ton at present, adds Briesemann. It is currently held high by speculatively oriented investors, although there is an oversupply.

The Commerzbank expert believes that nickel will rise to 18,000 from its current level of around 16,000 dollars in the coming year. In the years to come, the rally will accelerate thanks to the trend towards electromobility.

crude oil

"With a further recovery in the global economy, the demand for oil should increase significantly in 2021, while the supply should remain limited for the time being," predicts Frank Schallenberger, chief raw materials analyst at LBBW. He sees the price of a barrel (159 liters) of Brent oil from the North Sea at $ 50 at the end of next year.

Agricultural commodities

According to Commerzbank analyst Michaela Helbing-Kuhl, the wheat price will remain high in the coming year. "Even an increase in production in 2021/22 does not mean that there will be a large inventory build-up, because demand should continue to rise," said Helbing-Kuhl. In the case of maize too, a lower harvest meets a higher demand. In the case of soybeans, demand will exceed supply in the 2020/2021 season, despite an expected record harvest.

There is currently an excess supply of coffee for coffee, adds Helbing-Kuhl. In the coming 2021/2022 season, however, significant crop losses at the important exporter Brazil must be expected. The oversupply of cocoa, on the other hand, could be greater than previously thought due to the pandemic-related decline in demand in the current season.