Five ‘Ds’ raise risks and opportunities for investors

GLOBAL markets are up by 50 per cent since the start of the 2020s. US nominal gross domestic product has expanded by 30 per cent, and US corporate profits have risen nearly 70 per cent. All that in spite of unprecedented global lockdowns due to the Covid-19 pandemic, the outbreak of wars in Eastern Europe and the Middle East, and the largest spike in interest rates and inflation in decades.

These market and economic developments have led some to term the decade so far as the “Roaring 20s”, marked by high economic growth, strong market returns and improving productivity.

However, as we approach the midpoint of the decade, the future from here looks rather complex. Deglobalisation, debt, demographics, decarbonisation and digitalisation – the 5Ds – will be significant forces that present risks for investors but also opportunities. In aggregate, although we expect the trends to lead to higher growth and periods of higher inflation over the long term, they also offer opportunities in certain business sectors.