- There are various paths the world could take in the wake of the Covid-19 health crisis. Pictet Asset Management's study presents investors with four scenarios that might plausibly unfold over the next five to 10 years
The coronavirus pandemic has provided the world with its toughest stress test in more than 80 years. It has given rise to complex moral choices - not only for governments and businesses but also communities and families. Such has been the upheaval caused by Covid-19 that it is difficult to envisage a return to the life we knew before the virus struck.
Indeed, the history of pandemics shows that public health crises are profoundly disruptive. Their economic, societal and geo-political effects are often long-lasting, unfolding over many years. At Pictet Asset Management, we have conducted a study in partnership with the Copenhagen Institute for Futures Studies to better understand how the investment landscape might evolve in the next five to 10 years. The research presents investors with four scenarios that might plausibly unfold in the wake of the coronavirus pandemic.
We hope that these scenarios would serve as a starting point for long-term planning and strategic asset allocation. Our aim is to ensure investors are asking the right questions.
- Scenario A – Act local, think global: Citizens emerge from the public health crisis with a new moral purpose, having come to accept that that inequality and environmental degradation can only be reversed through collective action. What is the impact of global productivity and trade?
- Scenario B - All together now:The world transitions from a largely unipolar world directed by the US into a multi-polar one in which nation states and international organisations collaborate. Discover which investment trends could be on the rise.
- Scenario C - Not my problem: Citizens prioritise their own livelihoods and financial security and disengage from political discourse and community life. Governments struggle to transition to a more inclusive economy. What course could this take?
- Scenario D - Going it alone: Nation states turn inwards in an effort to safeguard their own natural resources, industries and workers. What is the impact on global problems such as environmental degradation and social inequality?
Each scenario has its own distinct economic, societal and geopolitical landscape. And each has its own set of implications for investors – industries that thrive in certain conditions might struggle for their very survival in others.
Tribune written by Steve Freedman, Senior Product Specialist at Pictet Asset Management.
To discover the four scenarios, download the report here.
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Stephen Freedman joined Pictet Asset Management in 2019 as Senior Product Specialist in the Thematic Equities team. Before joining Pictet, Stephen was at UBS Wealth Management, where he most recently served as head of Sustainable Investing Solutions for the Americas, based in New York.