UBS expects 2021 to be 'year of renewal'

After an unprecedented year, UBS, the world’s leading global wealth manager, expects economic output and corporate earnings to rebound to pre-pandemic levels in 2021.

In a base case scenario, a combination of fiscal stimulus, continued low-interest rates, and a vaccine rollout should generate above-average returns for small and mid-sized companies, select financial and energy stocks, and companies in the industrial and consumer discretionary sectors, according to the annual Year Ahead outlook published by UBS Global Wealth Management’s Chief Investment Office.

Investors should think global, look for catch-up potential, seek new long-term winners and diversify their portfolios by looking beyond the resilient, large and US-based firms that dominated in 2020, UBS recommends.

Private market and sustainable investments could be valuable additions to investors’ portfolios. Heading into 2021, UBS maintains its preference for sustainable investments for private clients investing globally.

Mark Haefele, chief investment officer at UBS Global Wealth Management, said: “We think 2021 will be the ‘year of renewal.’ Renewed growth, expansive fiscal and monetary policies, and fresh political leadership mean we should also expect new market leadership next year.”

“If the last decade was about investing in technology itself, we think the next will be about investing in the disruptors challenging the status quo in other industries,” Haefele added.

In the next decade, investors will face a world that is more indebted, more unequal, more local, but also more digital and, in some respects, more sustainable.

Investors can find long-term opportunity in trends that have been accelerated by the COVID-19 pandemic and will help power a new and renewable future, especially in sectors undergoing technological disruption, the global wealth manager noted.

Whether it’s the transition to a zero-carbon economy, the increased need for a more efficient and holistic healthcare system, or the push to further digitize financial services – the companies exposed to these trends are expected to enjoy above-average growth over the longer term.

By 2035, the 5G transition alone should create US$13.2 trillion in economic value, the report said.