Key trends provide a boost for your assets​ June 2021

Siegfried Top, Strategist, KBC Asset Management
“The world is evolving at breakneck speed. This brings both challenges and opportunities. It is crucial for businesses to offer solutions to meet new and existing needs. Investors succeed in writing these trends will reap the rewards over the long term.”

These trends give our future decisive twist

Our numbers are increasing and we are living longer

The united nations estimates that the current world population of 7.7 billion people is set to grow to 10 billion in 2050. This evolution will have an impact on our limited reserves of natural resources. Take fresh water, for example; it is only available in limited quantities, which are moreover steadily diminishing.

Our life expectancy is continuing to increase. And this process is happening quickly: each second, two people in the world reach the age of 60. This requires specific solutions in fields such as healthcare or looking after older people.

More than half the global population live in cities, and this proportion is increasing. We therefore need to look for innovative solutions in areas such as housing, spatial planning, infrastructure, and so on.

Our way of living and working has changed drastically

We are increasingly living and working digitally and online.

Additionally, there is a new generation of consumers, the ‘millennials’, born between 1980 and 2000, who value experience over possession. The success of the sharing economy is an example of this. Their predilection for new technologies and social networks is leading the way.

We are increasingly aware of our impact on the environment and expect companies to come up with sustainable solutions.

Innovative products and services will make the future ours

Technological innovations follow each other in rapid succession. Not just automation and robotisation, but also smart solutions such as artificial intelligence, are taking over the world. We use these innovations on a daily basis, often without being aware of it.

We are on the cusp of a new era. There are already a large number of applications, and the possibilities for the future appear endless.

Three reasons to ride these trends

  1. Structural growth through a focus on the future
  2. Leveraging opportunities through digital transformation
  3. Coronavirus led to an acceleration
1. Structural growth through a focus on the future

Major demographic, social, ecological and technological trends are changing our world almost beyond recognition. Their impact on our economy will not just be deep, but also long-lasting.

Their long-term nature means these trends are developing independently of the economic cycle. Try to see it as a compass, which points in a clear direction in all weather conditions.

Companies which respond to the structural trends and offer solutions to the many challenges often have a rock-solid model. Their high and stable earnings growth translates into strong value creation in the medium term.

2. Leveraging opportunities through digital transformation

We live in a digital world. The transformation to digital is rapid and irreversible.

Virtually all sectors of the economy today are turning to digital support to enable them to work more efficiently and create added value. New earnings models are being opened up, typically leading to higher margins.

Technology companies find themselves at the heart of this revolution, but the impact goes further:

  • Increasing automation and robotisation in industry;
  • A far-reaching shift towards e-commerce, in which online payment providers are also coming out as winners;
  • Online entertainment, e-games and social networks are displacing traditional media such as newspapers and TV;
  • Artificial intelligence and machine learning are making advances. The ability to analyse huge quantities of data in real time creates added value for both businesses and clients. Data providers, cloud computing and data infrastructure companies are also gaining ground as a result;
  • Cybersecurity enables everything to take place securely, whilst respecting privacy.
3. Coronavirus led to an acceleration

The screen on our smartphone or laptop is our window on the world.

  • Teleworking is here to stay. That’s good for providers of cloud software.
  • Huge numbers of us are shopping online. That also helps logistics companies: your parcels need to be delivered to your home quickly.
  • A virtual world of education, sport and culture is opening up. Streaming companies and game developers are reaching new target groups.

The care sector is showing the best of itself, but easing the burden in the future will require massive investments in innovation.

  • Carrying out doctor’s consultations remotely has become a reality.
  • Research into and development of new medicines and medical applications are in the spotlight. Here again, technology is part of the solution.
  • Our present infrastructure for elderly care needs to be renewed and developed further.

Did you know that...

… E-commerce has proved to be a great alternative during lockdown

All of us are doing more online shopping. This trend was already visible before the outbreak of covid-19, but the virus has given it an extra boost.

The potential is enormous. The rising trend appears unstoppable. Consumers who had never bought anything online before have discovered the convenience and benefits of online shopping. They have taken the first step, and the door has opened to online shopping in the future.

The success of e-commerce will continue after the crisis is over.

Edited to 20.05.2021. This document is a publication of KBC asset management NV (KBC AM). The information may be changed without notice and offers no guarantee for the future. No part of this document may be reproduced without the prior express written consent of KBC AM. This information is governed by the laws of belgium and is subject to the exclusive jurisdiction of its courts. Investing in the stock market is uncertain and involves risks