Our Thinking

We are focusing this autumn update on what the climate crisis means for our clients.

Expect profound changes in 2022 and beyond that will create both risks and opportunities for investors.

With record amounts of stimulus still gushing through global markets, and the economic cycle at a relatively early stage, we remain positive on risk assets.

We believe there is a striking disconnect between market pricing and the real economy, especially with regard to expected company earnings.

The second annual results of our Climate Impact Pledge showcase the corporate leaders and laggards on climate action; we are encouraged by improvements across sectors but will continue to press companies to meet this era-defining challenge.

In this outlook, teams from across LGIM examine the opportunities and risks with which investors are presented in this context.

A future in which there is less work to be done will radically reshape the economy, with important consequences for investors – including some contrarian implications for the consumer and real-estate sectors.

With global interest rates remaining near all-time lows, and $15 trillion of debt providing investors a negative yield, bond-market bears are in danger of becoming extinct. But could today’s ageing society finally provide the trigger for a sustained bond-market selloff?

Battery costs have declined rapidly in recent years, but the market is likely too optimistic about both the timeline for lower battery costs and what happens when we get there.

The global risk asset rally continued in early 2017, with emerging market investments the star performers.

The American midterm elections are approaching and the crystal ball gazing has begun. Here’s what investors should consider regardless of whether the US votes for a ‘distilled Donald’, the ‘Democratic double’ or a ‘divided democracy’.

The economic expansion of the last decade has been a consistent tailwind for financial assets. We see next year as the start of the twilight zone between expansion and an eventual downturn that will likely mark the end of the cycle.

In our last quarterly outlook, we flagged our cautious posture on risk assets, taken due to a number of smouldering risks on the horizon. One risk we did not highlight, however, was that a pandemic would break out, causing untold human suffering and economic damage.

"We are publicising the global corporate leaders and laggards on climate change."

Today’s China no longer matches the view of the country that most people have. Could this gap between perception and reality offer a wealth of investment opportunities?

While the financial reforms pose risks to trading, we can take heart from the benefits of greater transparency, says Ed Wicks, Head of Trading at LGIM.

The disruptive change of the ‘shale revolution’ has forced existing producers to adapt while reducing OPEC’s pricing power. We expect further far-reaching changes to take effect in the coming years

A renewable revolution is taking place in the way we produce and consume energy and it presents an enormous opportunity for investors.

Predictions about the demise of the TV industry have persisted for over a decade, even as UK TV advertising and subscription revenues have continued to grow. However, we believe the industry has reached a tipping point, driven by rapid developments in technology and changing demographics.

Increasing life expectancy is one of the most profound success stories of the post-war era. The pace and scale of this human success story has been remarkable, but it is creating its own challenges for corporates.

Technology change presents risks as well as opportunities. Identifying and valuing these risks is crucial to preserving investor value in both the short and the long term.

Some countries are in pole position, while others are in danger of crashing out. The global labour force (the number of 15-70 year olds willing to work) is slowing down.

Population density and growing congestion could limit growth in vehicle penetration.

In a largely anticipated result, Emmanuel Macron has won the French presidential election.

Monetary support is being tapered despite significant risks. Pressure is building steadily and we think that recent resilience is going to be tested.

A rising China creates the potential for tension between itself and the leading world superpower, the United States. Investors should pay attention to the shifting of global power structures.