In the wake of the quickest and sharpest selloff and then the quickest rebound in history, investment experts across the Natixis organization share a relatively optimistic economic outlook, but consensus says a full recovery will take time.
The Natixis Strategist Outlook explores the findings of 36 strategists, economists and portfolio managers representing Natixis managers in investments and banking indicating broad agreement on the risks ahead and some likely long-term consequences from the COVID crisis.
All eyes are on the U.S. election
While COVID-19 dominates market risks, all eyes are on the U.S. election. Although respondents are optimistic nominee Joe Biden will win the U.S. presidential election (78 per cent), there is concern over how any result will be received by the American public. Half of respondents (50 per cent) expect the results will be contested regardless, and half predict the election will result in social unrest (50 per cent).
The majority of participants believe that a Biden election will be better for global trade and geopolitical risk (75 per cent). Despite showing confidence in a Biden win, more than half (58 per cent) believe that Donald Trump’s re-election would be better for equities, given prospects for lower corporate taxes and a pro-business perception correlated with Trump. When it comes to bonds, strategists offer little opinion, which likely reflects the might of the Fed and a view that rates will be even lower for longer regardless of who sits in the Oval Office.
Technology and healthcare expected to be winners
Strategists are unanimous in declaring technology a clear market winner. Similarly, 94 per cent expect healthcare to become an even stronger sector for policymakers going forward, and stay-at-home businesses are a close third (91 per cent). Most surprising, though, is what the pandemic reveals about the resiliency of environmental, social, governance (ESG) investing.
With ESG investment strategies proving mostly defensive in the first six months of the year, interest in ESG investing has grown substantially, giving this investment approach a strong proof point that makes it a winner for 91 per cent of strategists, with 75 per cent of this group indicating they believe that ESG investing will become more prominent/mainstream as a result of this crisis.