Global Head of Research Christian Gattiker-Ericsson said that markets were currently on track for a steady recovery, but warned that “economists don’t have a blueprint for what’s been going on.” Even in the most optimistic scenarios, long-term damage is likely, especially in countries where the pandemic has shone a light on social frictions and structural deficiencies.
The UK in particular seems to be floundering; while many other jurisdictions are on-track for a pre-crisis GDP levels in 2021, the UK is expected to take considerably longer to recover.
Brexit has been a key point of concern for markets, with the end of the transition period on the horizon and a ‘no-deal’ scenario looking more and more likely.
Pictured: Head of Private Banking Jean-Luc Le Tocq said that the event summed up 2020, with “one speaker appearing on a screen, no spending on flights, no spending on hotels, and no fancy dinner in Guernsey the night before.”
But there are other factors at play, as well. Guernsey’s Head of Investment Management Craig Allen pointed out the the UK lacks investments in sectors that have seen success in the pandemic.
It is no coincidence, for instance, that the UK only holds 1.4% of global stocks in technology companies, which have performed exceptionally since the beginning of lockdown measures in developed countries.
“It can be difficult to want to invest when you see places like Gatwick airport entirely empty,” he said.
“But the stock market is not exposed to airports. It’s not exposed to small businesses with ten or twenty staff members. The stock market is full of giant tech companies experiencing all-time highs.”
The tech boom comes from the sudden importance of delivery services such as Amazon, and the need for online social networking through companies like Facebook and Zoom; despite their downturn early in the year, these companies are thriving, and their stocks are soaring.
Pictured: Christian Gattiker-Ericsson said that, while Covid has had an unprecedented impact on the global economy, most countries are on track for recovery and some market sectors have been performing tremendously.
Mr Allen was certain that there was a path forward for investors; Julius Baer portfolios have recovered since the initial drop in the first quarter, even as the UK continues to struggle. New investors may have missed the opportunity on technology, but there will be others. The firm have suggested investments that will provide some insulation from rising inflation, such as real estate, and the high-yield bonds currently being offered by the Chinese government.
Head of Private Banking Jean-Luc Le Tocq said that the biggest takeaway from the morning should be to “invest globally, and diversify your portfolio. Don’t put everything into Facebook; it could go up 100%, but it could just as easily go down 100%.”
Pictured top: Christian Gattiker-Ericsson, who gave his presentation from Zurich via video link, and Craig Allen.