What’s happening in the investment markets?
US inflation is on the increase meaning the high dollar is likely to remain about a 20-year high against Asian currencies, which have been trending down.
Surprisingly continued US inflation and expectations of larger rate hikes have brought a renewed burst in dollar strength spelling more trouble ahead for Asian currencies.
China’s renminbi teetered near the psychological 7 per dollar mark and the risk-sensitive Korean won slumped to a 13-year low against the greenback. Speculation that the Bank of Japan may intervene to prop up its currency came after the dollar-yen nearly touched the 145 mark.
The dollar index has rallied 15% year to date to a 20-year high and it could remain at elevated levels.
Further weakness has already been seen in the Korean won, Taiwan dollar, Philippines peso, Indonesian rupiah, Vietnamese dong and Malaysian ringgit.
The dollar would continue to see near-term upside and that strength was likely to persist, said JP Morgan Private Bank Asia head of investment strategy Alex Wolf in a recent commentary.
Citi Private Bank remains overweight US dollar assets, benefiting from the currency’s strength, and warns against rushing to bet against the greenback. ‘While we are slightly underweight global equities and overweight global bonds, we have far higher weightings in US assets than non-US assets. For many non-US investors, unhedged US dollar bond holdings have added value simply through currency appreciation.’
Article 2: Megatrends: helping investors with what sectors to focus on
Megatrends are social, demographic, environmental and technological forces of change that are reshaping our world - referred to as Thematic investing. The virtualisation of the economy, the rapid expansion of cities and the depletion of the Earth’s natural resources are just some of the structural trends transforming the way countries are governed, companies are run, and people live their lives. They create opportunities for companies with well-positioned business models and risks for others.
The Pictet framework consists of 21 megatrends organised in six clusters, with some megatrends including additional subtrends.
Source: Pictet Asset
One example: Megatrend cluster: Technology & Science
Virtualisation and dematerialisation
Trend toward substituting physical objects and processes with digital processes, including areas such as web portals, mobile apps, cloud services.
AI & Computing power
Trend toward substituting human effort / work with machine-based processes. Includes robotisation, automation with AI now becoming the dominant form. Economies benefit from enhanced performance and productivity gains. However, rapid changes create challenges for the current workforce to adapt / retool. Increasing computing power is tightly linked to this trend as an enabler. And while growth in computing power in the traditional paradigm (Moore’s law1) may be losing steam, commercial applications of quantum computing should begin picking up the baton this decade.
Trend toward an increasingly interconnected world. Includes connectivity between people, between people and objects and between objects (IoT). Greater speed, reliability and bandwidth are part of the trend.
Life sciences and applications
Rapid advancements in fundamental research as well as R&D surrounding living organisms is set to continue in various fields of biology including among others biotechnology, biochemistry, genomics, epigenetics, neuroscience, microbiome research.
The need for materials with the highest attainable quality and performance at the lowest economic and environmental cost is leading to the manufacturing and technological breakthroughs. Progress in materials technology, including nanotechnology, is increasingly viewed as a possible solution to environmental and health challenges.
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