COVID-19 has triggered the most transformative macroeconomic event in recent history. To prevent the recession from developing into a lasting depression, global policymakers have launched an unprecedented array of fiscal and monetary measures. Additionally, investors face the rise of domestic social unrest and geopolitical tensions that generate economic uncertainties, while messages surrounding the US-China trade relationship are remaining mixed. US-China trade tensions are unlikely to dissipate altogether, even after the US elections later this year.
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Jon Maier, Chief Investment Officer at Global X ETFs, said: “China’s importance on a global scale is growing. However, the Sino-American trade dispute remains a concern. We are, for the first time, starting to experience a reversal of globalization. A significant economic consequence of the decoupling between the US and China will be the reshoring of manufacturing from Asia, and we believe that this, coupled with a need to reduce costs, will accelerate trends such as robotics and automation.”
Thematic Investing – Navigating the short-term volatility with a long-term approach
Over the past few months, we have observed how the pandemic has caused structural shifts to our daily lives. These disruptions, triggered by COVID-19, have reshaped our behaviors and driven the emergence of a new stay-at-home economy that will offer opportunities for growth-oriented investors.
Thematic Investing is a long-term strategy designed to benefit from macro-level changes that disrupt and redefine industries. Investors seeking to identify early, substantive shifts to the fundamental makeup of technology, demographic consumer habits, or even physical environments, can utilize thematic strategies to capture these emergent trends in their nascent stages, long before they fully mature. COVID-19 is both an accelerant and market expander for the structural changes behind myriad themes, causing faster adoption among broader audiences.
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