Outlook 2021: Didier Saint-Georges (Carmignac)

December 25, 2020

By Didier Saint-Georges, Managing Director and Member of the Strategic Investment Committee at Carmignac

What is the economic outlook for 2021?

In 2020 economists were counting on a mild recovery following the 2018-19 slowdown, but their hopes were suddenly dashed by the COVID-19 crisis. However, this did not prevent investors from enjoying very positive returns on both equities and bonds, except mostly in Europe, where the COVID-19 crisis was more severe, thanks to the support of both government and central banks.

One year later they are faced with a very different scenario: a path is about to become clearer for the production and the wide distribution of a COVID-19 vaccine, but at the same time the hopes of a very large additional stimulus package in the US have basically vanished following the elections results.

What are the biggest opportunities and threats for investors?

The central economic scenario for 2021 remains one of subdued economic growth globally, but with a marked improvement in specific sectors that were most affected by lockdowns, such as transportation, leisure and hospitality.

This calls for a backbone of investments in high-visibility equity sectors, which include Technology but also Healthcare, notably in China, and also positions in these reopening sectors, some of which were really battered, both in the equity and credit space.

The risk would be that this reopening either falters if vaccines lead to disappointing results, or to the opposite reignites excessive exuberance, pushing up interest rates, and ultimately driving equity markets down.