As an active investor in few fund houses, one is frequently invited to Investment seminars and events. Due to the pandemic, this year Principal Asset Management had a series of webinar. One of it is titled: Positioning for Recovery in 2021 (Part 2). which was held on 16th December 2020 at 8.30pm. For the benefit of all readers, we are going to summarize the key takeaways from it.
Just some disclaimers here: The author is not responsible for any errors made while translating information given in the Webinar. The views were provided by the fund house and AntOnTheStreet shall not be held accountable or responsible for any accuracies of information provided in this article. Readers are advised to exercise their own judgement before making any purchases in stocks or unit trust funds.
Due to copyright issue, we will not be able to share you the snapshots of the slidepack in this article. However, you may keep in touch with us should you want a copy of it and it's possible to do it privately.
Key Takeaways
1. China will continue to dominate world's growth in Year 2021. At least 1/3 of World's growth will be coming from China
2. Key risk will be if vaccines don't work or have issue. Current equity rallies factored in vaccine will work.
3. Principal has grouped the Year 2021 investment theme to: Renewal, Revitalize and Recovery.
a. Renewal: new practise and right technology is deployed to address past weaknesses and to meet future demands.
b. Revitalize: resume conducting business in new eco-system facing new demands from competitors, customers and business partners.
c. Recovery: economies and companies leveraging on respective comparative advantage to generate better profitability/income.
To reposition into the 3Rs themes. Also, in biotechnology and technology sectors as their role in human day to day life will keep on increasing.
4. 2020 Q4 company results (due in Jan & Feb 2021) for European markets and some parts of the world might not be pretty (mobility chart shows that further lockdown caused reduced mobility). However, the speaker is unsure that it'll caused a big dip as markets might just look past the slowdown.
5. China's economy continue to transform from export based to services based and domestic consumption. The social migration (lower income to middle income) will continue to support demand for higher value products (i.e. branded shoes, cars, housing)
6. EPS expected to grow strongly in 2021, with China leading the pack followed by ASEAN countries. The rest of the world will also recover fast but expected to be slightly lower than China and ASEAN region. World's GDP is expected to grow ~5% (vs previous yearly average of ~2.4%)
7. Expect markets to be less volatile as Biden will behave like 'a traditional president', no social media storms issues.
8. 2021 world's fiscal policy will remain supportive and not many countries will raise rates. Some countries might still do one more round of rate cuts and stimulus while some might do a small rate hike if economy stabilizes.
9. Raw materials prices will do well due to increased demand. This includes metal, silver, oil, gold etc.
10. There are observations from majority of companies that they are seeing positive margins from Aug onwards. It was understood that before that a lot of facing negative margins. Hence, the companies are able to do proper business planning (i.e. starting to plan for expansions, upgrades etc). This is reflected in PMI numbers throughout the world.
11. When asked on "Any recommended Principal Asset Management fund to choose from to benefit from the Recovery in 2021". The speaker is bullish on Principal Greater China Fund (due to bright outlook in China). However, due to Portfolio and Risk Management issue, it's recommended to diversify into Asia Pacific Dynamic Income, Growth, Millennial Equity or ASEAN (China-Indonesia-India Fund).
