Supertrends: Pushing for change

OUR normal way of life has ground to a halt because of the Covid-19 pandemic. This also holds true for the economy, as governments have shut down economies to contain the spread of Covid-19 and help their health systems cope with the sudden surge in critically ill patients. This crisis is challenging existing systems and structures, sowing the seeds for further change ahead. The 2020 coronavirus outbreak is likely viewed as a turning point in our lives and thinking.

In an exceptionally positive year for global equity markets in 2019, our Supertrends themes outperformed, providing further evidence that the societal trends that they touch upon remain highly relevant.

This year, our "angry societies" trend evolved into "anxious societies", as popular discontent is increasingly targeted at inequalities and other issues at home. Our "technology at the service of humans" theme focuses on edge computing as a complement to cloud computing in an increasingly digitalised world. The infrastructure trend has a new smart-cities subtheme, which looks at the infrastructure challenges facing fast-growing urban centres.

Our silver economy Supertrend has a new focus on emerging markets, which are home to a fast-growing senior population and harbour scope for strong growth in the area of healthcare provisioning and insurance.

The "millennials' values" theme looks at how this cohort is driving responsible consumption. We have also launched a sixth Supertrend focused on climate change, which focuses on sectors that can play a key role in decarbonising economic growth in the coming years.

ANXIOUS SOCIETIES - INCLUSIVE CAPITALISM

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At the time of the launch of the "angry societies" Supertrend a few years ago, disgruntled middle classes were shaking up politics in many developed countries, leading to the rise of political populism and protectionism in an increasingly multi-polar world. Three years later, anger is morphing into anxiety. Faced with the coronavirus pandemic, governments and companies are wrestling with an unprecedented shift in the size and nature of social responsibility.

Investors can and will play an increasing role in enabling solutions that address the key concerns of citizens around the world, including inequality, rapidly changing work environments, old age funding, housing affordability, healthcare and education. Now is the time for inclusive capitalism.

Beneficiaries

INFRASTRUCTURE - CLOSING THE GAP

Infrastructure stocks tend to offer solid dividend yields, which lend them appeal as investors struggle to generate returns amid low or even negative interest rates in many parts of the world. This low or negative interest rate environment, which aids the approval process for new projects, should remain a tailwind for the this Supertrend in the months ahead.

Separately, climate change concerns are creating powerful regulatory and political catalysts within the infrastructure space. Finally, our new sub-theme "smart cities" focuses on the infrastructure challenges facing fast-growing urban centres, including new challenges revealed during the coronavirus pandemic.

Beneficiaries

TECHNOLOGY AT THE SERVICE OF HUMANS

There are many reasons why companies continue to invest in their digital transformation, such as adapting more quickly to changing customer needs, gaining operational efficiency and boosting profitability. The coronavirus pandemic has uncovered many new reasons to further increase investment in digitalisation.

Increased mobility, automated real-time processes (edge computing) and at-home education and entertainment are just a few of them.

Beneficiaries

SILVER ECONOMY - INVESTING FOR POPULATION AGING

At the heart of this Supertrend lies the projection that the world's senior population will double to more than two billion by 2050. This will transpire regardless of the state of the world economy or political events, creating needs associated with an ageing population in healthcare, insurance and funding solutions and consumer and property markets. Looking ahead, a focus on emerging markets makes sense, given that two-thirds of the incremental number of seniors will live in that group of countries, wherein there is already an existing deficit of healthcare provisioning and public and private insurance solutions.

Beneficiaries

MILLENNIAL VALUES

Sustainability has been a key subtheme of the "millennials' values" Supertrend since launch. While vegans remain a small minority in developed countries, Generation Y and Z are more likely to adopt a plant-based or vegetarian diet due to concerns about the environment and health. Their evolving food preferences are influencing broader society, driving sales of meat and dairy alternatives. Now even well-known fast-food chains are testing plant-based meat and hamburgers on their menus. Millennials are also taking the lead in other areas, including subscription-based services.

Beneficiaries

CLIMATE CHANGE - DECARBONISING THE ECONOMY

Global warming has caused major disruption in weather patterns, and extreme conditions appear to be becoming the new norm. The United Nations World Meteorological Organization estimates that if we do not change the way we consume and produce worldwide, global temperatures are likely to rise by 3-5 deg C by the end of 2100. In light of these prospects, governments around the world have stepped up efforts to fight climate change and embarked on energy transition strategies to achieve the targets established under the 2015 Paris Agreement.

Beneficiaries

The writers are Michael Strobaek, global chief investment officer, Credit Suisse and Nannette Hechler-Fayd'herbe, global head of economics & research, Credit Suisse