The world continues to change rapidly and new secular growth themes are emerging, despite volatile markets and rather negative news flow. With equity valuations close to trough levels, investors should not lose sight of long-term opportunities. In our new monthly “Thematic Roundup in 60 seconds”, our thematic investment team highlights some key developments:
- Health care: The biggest news in healthcare was the surprising and unequivocally positive Phase 3 trial of Biogen's and Eisai's drug lecanemab, which is used to treat Alzheimer's disease. The drug candidate slowed the rate of cognitive decline for people in a clinical trial by 27%. This is the most encouraging result in clinical trials treating the underlying causes of the disease to-date.
- Energy crisis: ?Nearly 90% of Europe's gas reserves are filled as it enters the fall/winter season, which should be sufficient if the weather stays mild. However, the recent explosion in the Nord Stream gas pipelines suggests an escalation in the energy crisis with Russia and a potential longer-term gas supply issue for Europe. The current crisis has emboldened European leaders to accelerate the energy transition.
- Clean energy: The clean tech theme received a significant boost from the recently proposed US climate package, which is part of the Inflation Reduction Act, and aims to reduce carbon emissions by 40% before 2030. While the bill is watered down from the original “Build Back Better” plan, it will support US-based clean energy companies through tax incentives, hastening the shift towards renewables over the coming years.
- US-China tech tensions: The Biden administration’s decision to ban chipmaker Nvidia from shipping advanced GPU (graphics processing unit) chips to Chinese customers is a clear escalation of trade tensions. We believe as a next step the US could ban China from purchasing any technology related to autonomous vehicles, as they may also be used for military purposes.
- Consumer spending: Demand in the luxury segment is extremely strong, supported by a rebound in tourism. Gyms continue to reap the benefits of rising membership levels, which are nearing pre-Covid levels, and are supported by greater participation from millenials and Gen Z, This comes at the expense of at-home gym solutions.
Learn more about J. Safra Sarasin Sustainable Asset Management's thematic strategies:
