“Current regime changes are taking shape”
‘Greenification’ and digitalisation has become increasingly prominent. Wellink says such fundamental regime changes lead to elevated inflation in the short run and such levels will likely maintain elevated for the years ahead. As we already have seen over the last 12 months, companies tied to these mega-trends are attractive targets for investors.
“Italy and France are driving forces in interest rate policy”
Wellink expects interest rates to be 5-6% in the coming years. Although this seems high, considering historic recovery rates this is unsurprising. Given debt levels of some European countries, there will be a ceiling to rate hikes, unless additional measures are considered.
The US and China, both internal markets focused, become less exposed to exports, and are far less impacted by energy issues. Their economic recovery will likely shapen faster and hence companies from these regions could be looking for M&A targets in Europe, although they will likely adhere to their core activities.
Governments have bought bonds at high prices over last years, and this is likely to lead to additional pain point in coming period.
“Opportunities are still present”
Wellink believes the macroeconomic environment will give rise to niches of opportunity for the global economy. Next to companies exposed to technology and green products undergoing structural shifts, also niches of premier consumer products might well uphold growth.