New year. New risks. New possibilities

Weighed down by 2020’s COVID-19 hangover, will 2021 offer a whimper or a bang?

Quietly, as the world’s attention was absorbed by ruckuses and rumblings over the United States’ (US) election outcome and the rising number of coronavirus (COVID-19) cases around the world, the button was finally pushed on Brexit. After years of debate and conjecture, this messy divorce finally came to bear, overshadowed by news of effective vaccines on the horizon.

Similarly, despite the outrage over the US Capitol riots in January and the subsequent impeachment of Donald Trump by the US House of Representatives, the billionaire-turned- president’s tenure at the White House also drew to a close.

Now, with the reset button pushed in two key global economies, some risks have subsided while others are just beginning. This, quite frankly, seems to be the early and emerging theme of 2021: a fresh slate in some respects but one still bearing the deep hallmarks of an unprecedented 2020.

It is right and fitting, therefore, that we use our first edition of Global Perspectives for the year to look back for insights as we boldly continue to look forward.

For investors the year to comeI’m delighted to include in this edition a fascinating piece examining a century of global leaders, as we map the rise and fall of giants such as General Electric, Kodak and Chrysler and note the rise of Apple, Amazon, Facebook, Alphabet and Microsoft. Compiled by our Chief Investment Officer, Patrice Rassou, and Ashburton Investments’ Head of Quantitative Research and Data Science, Mathew John, this exploration underlines the tenuous dominance of so many world class companies over time. It also highlights the need for constant research and insight into evolving opportunities and markets, to ensure that your investment portfolio and outlook keeps pace with global shifts.

With this in mind, we take a closer look at the global macro environment, with a particular eye on the positioning of the United Kingdom (UK) and South African markets in the context of a world facing a contraction in economic activity as a  result of the ongoing pandemic.

While South Africa continues to face both deep structural and COVID-related challenges, the country also finds itself in a more favourable position than it was a few months ago. All eyes will be on the budget in February and the government’s commitment to containing the wage bill. Also, some positive regulatory changes are in the pipeline, explains Nico Els, our Multi-Asset Strategist.

Dr James Cooke, Ashburton Investments’ Head of Global Equities, also takes a closer examination of the new-look UK in his piece, which highlights the country’s advantageous position in terms of vaccinations given the advance purchases of several vaccines and the swift roll-out of a national immunisation strategy.

Like much of the developed world, monetary support is likely  to continue to support the UK economy in 2021, largely in the form of quantitative easing and ultra-low interest rates.

The developments in the US will continue to impact global markets over the year as well as those in the European Union and, of course, China.

For investors, the year to come offers a mixed bag of central bank stimulus, low interest rates, flat or slow-to-rise yields and accelerating inflation. Yes, there are new and emerging risks, but also new opportunities and some attractive entry points into emerging markets. Overall, to quote Jarred Sullivan, Global Multi-Asset Investment Strategist, we remain “cautiously optimistic”. And, with that, we open the door to 2021.