Investment Outlook: Restart after sudden halt?

The rug was pulled out from under risk assets during March, as investors realised the severity of COVID-19 and its impact on the global economy. Central banks and governments responded rapidly and aggressively with stimulus packages, but the economic damage left behind by the pandemic will undoubtedly take time to repair. The question that investors are asking themselves is how fast economies can be restarted and revert to some kind of normality. Our forecast is a short but deep recession this year, followed by a robust recovery in 2021.

“Although it will probably take several years before the economy returns to its old growth trends, we still expect the rebound to begin during the next few quarters. Continued low interest rates and bond yields, as well as the prospect of several years of recovery-driven economic growth, suggest that higher equity valuations may be acceptable in the future. At present, we regard any stock market downturns as potential buying opportunities,” says Johan Hagbarth, Investment Strategist, Private Banking.

The May issue of the Investment Outlook report includes two theme articles, both dealing with the energy sector. We examine recent dramatic oil price developments due to plummeting demand and tensions between petroleum-producing countries. We also follow up earlier theme articles on key developments related to ​​sustainable investments. This time we describe what is happening around renewable energy, a vital element of our shift towards a more sustainable society. We hope and trust that the stimulus measures we expect to support the rebuilding of the economy after today's deep crisis will also be green in nature, reinforcing our view that sustainable investments can both benefit society and generate future returns.

The Investment Outlook can be read in its entirety or as a 2-page summary at seb.se/investmentoutlookreport, where you also find a web video with our experts Johan Javeus and Johan Hagbarth.