Horizon Handout January 2021

Economics

• Economy: The recovery is interrupted by a second wave of infection. Smaller setback than in spring.
• Governments and central banks continue to support the economic recovery with all available means.
• Monetary and fiscal policy support and the vaccine news point to a strong recovery from 2021 onwards.

Equities

• All equity regions and especially COVID-19-ravaged sectors and regions gained in Q4.
• We expect corporate earnings to rise substantially next year, more than offsetting a decline in valuations.
• We prefer for the full-year 2021 especially European and emerging-market equities.

Bonds

• Government bonds: Risk-on sentiment, rising debt and inflation expectations are negative for safe-haven bonds
• Corporate bonds: Companies with improved balance sheets, persistent excess demand, positive investment outlook.
• Emerging-market bonds: Local-currency bonds to benefit from stronger growth and weaker US dollar.

Alternative investments / commodities

• Rising demand for gold jewellery from emerging markets and negative real interest rates should support the gold price.
• OPEC+ is successfully steering the oil market. Anticipated demand recovery opens up moderate price potential.
• In the long term, structural trends are driving demand for industrial metals. In the short term, a setback seems likely.

Currencies

• The common currency remains above 1.20 U.S. dollars per euro. ECB measures without much effect.
• DThe British pound hangs closely on Brexit news situation. Virus mutation in southern England brings new uncertainty.
• The Swiss franc remains very highly valued. Its price fluctuations reflect risk modus on the markets.

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