Is the global economy in for a reset?

COVID-19 has created a financial bazooka for the global economy. Markets are going through an interplay between epidemiology and economics. Governments are having to trade off between healthcare and economic care. Around 60-73 million people have lost their jobs globally. So the big question is: Is the global economy heading for reset and following the new world order?

 

I would say yes. The digitalisation of economy and assets is happening at a phenomenal speed, and there are a few noticeable variables coming into the global markets.

 

  1. Digital passport (healthcare passport) is going to be introduced.
  2. QR will be mandatory in your mobile.
  3. Paper currency will be replaced by digital currency.
  4. Vaccines and chips details are required for all financial market transactions.
  5. Technology takes the center stage. AI/EV/5G will become very significant.

 

Pivot moves to emerging markets – game of growth

 

Long-term investors who are hunting for yields are heading to emerging markets (EM). The latest report from UBS Wealth Management points out that global investors added a net US$53.5 billion (RM216 billion) to holdings of emerging market equities and bonds in January 2021.

The performance of EM assets has nonetheless been mixed so far this year, with EM stocks outperforming the global market by 5 percentage points while EM sovereign bonds are down 1% year to date. Despite this ambivalent outcome, we at Juwai IQI see several reasons why investor optimism over emerging market assets is justified.

 

First, inflows into emerging markets look set to continue. EM assets typically benefit from risk-on sentiment among investors, which we expect to be supported by evidence of a broadening of the global economic recovery, vaccine rollouts, and an additional US stimulus package.

 

EM equities should benefit from strong earnings momentum and attractive valuations versus developed markets. EM credit offers attractive yields in a low interest rate regime. We continue to see scope for EM value to outperform overall EM equities and are positive on China, Egypt, Indonesia, Malaysia, Mexico, Pakistan, Peru, the Philippines, Qatar, Russia, South Africa and Latin America.

 

 

This article was contributed by Juwai IQI chief economist Shan Saeed (pix).

Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.