The 2021 Investment Outlook:
On Economy, Capital Markets & Investment Outlook
The world expected this decade (2021 to 2030) to be disrupted by technology, new economies growing, wealth growth and the biggest wealth transfer taking place. In 2020, COVID-19 strikes and the global economy comes to a standstill. Certain sectors such as tech, internet economy, consumer staples are doing well whereas sectors such as hospitality, travel, luxury, retail, F&B, entertainment, real estate are suffering.
How do you manage $20 million to $3 billion assets in 2021?
How do you invest $3 million to $300 million in 2021?
The 2021 Investment Outlook:
- What is the economic outlook for 2021 and beyond?
- What are the new big trends and key risks for the next 1 to 3 years?
- What are the investment trends & opportunities in 2021?
- Where are capital flowing into? What is driving the market?
- Any advice for investment managers, advisors, professional investors and HNW investors for 2021 and beyond on managing assets and investments?
The 2021 Investment Outlook: Tuan Huynh, CIO of Europe & Asia at Deutsche Private Bank
The 2021 Investment Outlook: Tuan Huynh, Chief Investment Officer of Europe & Asia at Deutsche Bank International Private Bank
We speak to Tuan Huynh, Chief Investment Officer of Europe & Asia at Deutsche Bank International Private Bank, sharing his valuable insights on the economy, capital markets and investment outlook for 2021.
Deutsche Bank is Germany’s largest bank and one of the largest bank in Europe and the world. Deutsche Bank International Private Bank manages more than $281 billion of assets globally (June 2020).
Highlights from The 2021 Investment Outlook:
- Outlook: “Divergence between and within economies”
- “Crisis has emphasized the role of the state in driving the economy”
- On Government Support: “Ultimately limits the ability of an economy to reinvent itself and ultimately thrive”
- “Markets have been sustained through the fiscal and monetary support”
- “Could make social inequality worse through inflating value of certain assets”
- 2021 Opportunities in Asia: “Asian equities and Asian fixed income, supported by the relatively faster recovery”
- “Invest in key themes that will play an increasing role in long-term global development”
- “Sustainability (ESG) will likely be even more important”
- 2021 New Theme: Blue Economy
- First day at work in 2021: WFH (Work from home)
” Invest in key themes that will play an increasing role in long-term global development “
Introduction
Who are you, and what do you do?
Tuan Huynh: I am the Chief Investment Officer of Europe & Asia at Deutsche Bank International Private Bank.
- Chief Investment Officer of Europe & Asia
- Deutsche Bank International Private Bank
I lead the distribution of the house view at Deutsche Bank International Private Bank.
Did you go to office on the first day of work in 2021 or did you work from home?
Tuan Huynh: WFH (Work from home)
1. What is the economic outlook for 2021 and beyond?
Are governments going to restructure economy or are private enterprises & investments driving the economy our best hope? (Given political & government uncertainties that will slow down economic policy planning & execution)
Tuan Huynh: We believe that the crisis has emphasized the role of the state in driving the economy, and this will be a trend going forward. Questions around the merits of individual responsibility vs social security nets will persist and be an important subject for political debate.
- Crisis has emphasized the role of the state in driving the economy
- Individual responsibility vs social security nets
- Greater inter-relationship between public and private partnerships on healthcare provision
The pandemic has also underlined the importance of the state in healthcare provision (even if provision is usually private). We see a greater inter-relationship between public and private partnerships on this front as concerns about disease control and populations’ health are not going to go away.
” Crisis has emphasized the role of the state in driving the economy “
2. What are the new big trends and key risks, given COVID-19 had changed the direction of the economy, perhaps at least for the next 1 to 3 years?
Tuan Huynh: We see divergence between and within economies as one impact of the Covid-19 induced crisis. State support has been abundant in key economies, yet this does come with risks. One risk is that, in this era of rapid change, state support ultimately limits the ability of an economy to reinvent itself and ultimately thrive. Firms need to be allowed to prosper or fall back as the economic forest renews itself. In addition, accommodative monetary policy could make social inequality worse through inflating the value of certain assets.
- Covid-19 Crisis Impact: Divergence between and within economies
- State support limits the ability of an economy to reinvent itself and thrive
- Accommodative monetary policy could make social inequality worse through inflating value of certain assets
- Strength of political voices, including millennials
- Fiscal spending: Healthcare may remain a priority, infrastructure demand attention
Fiscal policy support therefore has to be seen as addressing divergence, with demographic changes both having an impact on the need for it and also the strength of political voices in play – including those of millennials. Healthcare may remain a priority for fiscal spending but infrastructure will also demand attention.
” Covid-19 Crisis Impact: Divergence between and within economies “
3. What are the investment trends & opportunities in 2021? (And in the mid-term and the long-run?)
Tuan Huynh: In 2021, we see investment opportunities in Asian equities and Asian fixed income, as they should be supported by the relatively faster recovery, loose monetary environment and the pro-growth government policies.
We also like U.S. equities because it could be backed by President Biden’s stimulus programs and the earnings recovery. We also like gold as it serves as good diversifier in portfolio. Gold also tends to perform well in the low interest rate and the relatively weak U.S. dollar environment in the near term.
Investment Opportunities in 2021:
- Asian equities and Asian fixed income
- U.S. equities
- Gold (diversification in portfolio)
Investment opportunities in the long-run
In the long-run, the 2020 pandemic has re-emphasised the importance of our long term themes, along the dimensions of technology, demographics and sustaining the world we live in. Technology plays an ever-increasing role in many sectors and in our lives – from healthcare through to home working. Investors are also increasingly aware of demographics, which seem likely to have a growing impact on both business and government priorities (and thus spending and investment decisions). Meanwhile, growing interest in sustainability is another pre-existing trend accelerated by the crisis.
- Themes: Technology, Demographics, Sustaining the world
- More Themes: Cyber security, 5G, healthcare, millennials, resource stewardship, blue economy
We think that cyber security, 5G, healthcare, millennials, resource stewardship and the blue economy could prove particularly interesting investment themes.
Blue Economy:
World Bank definition ~ Sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem.
European Commission definition ~ All economic activities related to oceans, seas and coasts
” Asian equities and Asian fixed income, supported by the relatively faster recovery”
4. Where are capital flowing into?
What is driving the market? The real economy? The financial markets?
Tuan Huynh: The markets have been sustained through the fiscal and monetary support of governments and central banks around the world. We observe an inflow in equities, including U.S. and EM Asia equities (Emerging Markets). China has also seen a steady flow of funds into its high yield bonds and stocks.
Investors are faced with an overall market environment that should support risky assets. Equities continue to be supported by an improving macro environment, but potential headwinds lie in new regulation and taxes (U.S.) and the development of U.S.-China relations.
” Markets have been sustained through the fiscal and monetary support “
5. Any advice for investment managers, advisors, professional investors and HNW investors for 2021 and beyond on managing assets and investments?
Tuan Huynh: Both within a Strategic Asset Allocation, and also in satellite investments to existing portfolios, we think it makes sense to invest in key themes that will play an increasing role in long-term global development.
Our key themes since 2017 sit within a triangle bounded by technology, demographics and sustaining the world we live in. We believe that sustainability – often in the form of ESG investment – is likely to be even more important in years to come. This year we deepen our sustainability view by launching a new key theme on the blue economy.
- Invest in key themes that will play an increasing role in long-term global development
- Key Themes since 2017: Technology, Demographics and Sustaining the world
- Sustainability (ESG) will likely be even more important
- 2021 New Theme: Blue economy
- More Themes: Cyber security, 5G, healthcare, millennials, resource stewardship
- Asset Classes: Equities market, U.S. and Chinese equities, emerging market credit, Asian credit
Other key themes could include cyber security, 5G, healthcare, millennials and resource stewardship. Regarding asset class views, we hold positive views on equities market, especially U.S. and Chinese equities. In fixed income, we also like emerging market credit, especially Asian credit.
” invest in key themes that will play an increasing role in long-term global development “
Thank you Tuan Huynh for sharing your valuable insights on the economy, capital markets & investment outlook for 2021.
Do you look forward to be able to travel for work and holiday?
Tuan Huynh: Holiday
Which will be your likely first destination(s)?
For Holiday: Singapore
Related:
- Deutsche Bank to Create $281 Billion International Private Bank
- 2020 List of International Private Banks in Hong Kong
- 2020 List of International Private Banks in Singapore
Tuan Huynh, CIO of Europe & Asia at Deutsche Bank International Private Bank
Tuan Huynh is the Chief Investment Officer (CIO) of Europe & Asia at Deutsche Bank International Private Bank based in Frankfurt. He leads the distribution of the house view at Deutsche Bank International Private Bank.
Prior to his role as Chief Investment Officer of Europe & Asia, he was the Chief Investment Officer and Head of Wealth Discretionary for Emerging Markets based in Singapore. Tuan Huynh had started his career in in 1999 in Deutsche Bank as a Portfolio manager.
About Deutsche Bank International Private Bank
Deutsche Bank’s Private Bank corporate division combines the private banking expertise of the market-leading Deutsche Bank and Postbank brands in Germany with the global network of the International Private Bank (IPB). This includes IPB’s global business with high net worth individuals and SMEs.
The Private Bank provides high-quality financial services from a single source. These range from comprehensive services for private customers and support for demanding entrepreneurs and their families, to solutions for SMEs in important Eurozone markets and India.
The Private Bank is one of the four pillars of Deutsche Bank, along with the Corporate Bank, Investment Bank and DWS, the institution’s asset management unit. Deutsche Bank is a leading bank in Germany with a global network and strong European roots.
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