– Andrew Macken
Heraclitus, the ancient Greek philosopher, realised more than 2,500 years ago that the world was in constant flux. The only constant in life, as the saying goes, is change. Well, in 2020, the year dominated by the COVID-19 pandemic, the rate of change was fierce. And investors need to reflect, reset and think carefully about what the future may hold for our post-pandemic world.
In our whitepaper that follows, we analyse the broad forces we are observing in the global economy today, including their drivers and implications. We build on our internal research published in 2019 and review the latest research on many of the dynamics we are seeing today.
Our analysis leads us to believe that the forces driving low economic growth, increased indebtedness, low interest rates and asset inflation will only strengthen in a post- COVID-19 world. Furthermore, we identify inequality as an important consequence of our economic system and we see it becoming more extreme in a post-COVID-19 world. Not only does increasing inequality have important political implications, it also carries with it important (negative) side-effects to our broader economic system, including: slower economic growth, increased indebtedness, increased financial risks and greater political capture. Ironically, the price of preserving the overarching structure of this economic system is perhaps making it work more beneficially and equitably for the broader population.
We also derive the key investment implications that are guiding the construction of our Montaka portfolios today. These include a preference for: (i) equity exposure over fixed-income; (ii) businesses which are likely to deliver high-quality growth over a long period of time; (iii) businesses with strong and expanding data advantages; (iv) businesses who enjoy a relatively wealthier customer base – on either the consumer side or enterprise side; and (v) businesses which avoid the complexities and increasing risks of cross-border supply-chains – particularly with respect to Chinese borders.
Please download the complete whitepaper on this topic by clicking below: