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BANK OF AMERICA: 10 main themes will define the next decade. Here are the winners and losers for each.

Dec 4, 2019, 23:43 IST

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Reuters/Pawel Kopczynski
  • Bank of America Merrill Lynch analysts published a list of 10 megatrends that could shape the next decade for investors.
  • The next 10 years will be unlike anything seen before as climate change and a growing and aging population continue to present new challenges, the firm said.
  • Here are the 10 themes that will define the next decade, along with winners and losers for each, according to Bank of America.
  • Visit the Business Insider homepage for more stories.

By 2030, the world's population is expected to grow by one billion, with hundreds of millions at risk of losing their jobs to automation. At the same time, the climate crisis is worsening across the globe.

These are just a few of the trends that investors will be forced to grapple over the next decade, according to Bank of America Merrill Lynch.

The bank compiled a list of 10 themes to help investors navigate the massive changes it expects in the coming years. The report also includes some broad winners and losers for each theme.

"We enter the next decade with interest rates at 5,000-year lows, the largest asset bubble in history, a planet that is heating up, and a deflationary profile of debt, disruption and demographics," the firm's analysts wrote in November.

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They continued: "The social, political and economic responses to these challenges, all heading to a boiling point this decade, will overhaul traditional paradigms."

Here are the 10 megatrends that could shape the next decade, plus their respective winners and losers, according to Bank of America:

Get the latest Bank of America stock price here.

1. Space

Winners: Aerospace & defence

Losers: Legacy satellites

BAML's take: "Tourism and nanosatellites are the next frontier for an industry that could be worth US$1tn by 2030."

Source: Bank of America Merrill Lynch

2. Smart everything

Winners: IoT, connectivity, smart cities, 'big brother tech'

Losers: privacy, offline

BAML's take: "500bn connectable devices by 2030 to combat deflationary demographics but at the risk of the death of privacy."

Source: Bank of America Merrill Lynch

3. Moral capitalism

Winners: ESG, impact investing, stakeholders

Losers: Business-as-usual investing, solely profit-maximizing firms

BAML's take: "US$20tn of AuM is going into ESG strategies over the next 20 years = nearly market cap of S&P500."

Source: Bank of America Merrill Lynch

4. Splinternet

Winners: Emerging markets/the East

Losers: Developed markets/the West

BAML's take: "China to overtake the US and become the world leader in AI by 2030. 'Sovereign internets' expand."

Source: Bank of America Merrill Lynch

5. Robots & automation

Winners: Automation, local production, big data & AI

Losers: Humans, global supply chains

BAML's take: "Up to 50% of jobs at risk of automation by 2035."

Source: Bank of America Merrill Lynch

6. Climate change

Winners: Clean energy, electric vehicles

Losers: Fossil fuels, diesel cars, single-use plastics

BAML's take: "Investors are more focused than ever on global warming's impact on the economy, society, unemployment and migration."

Source: Bank of America Merrill Lynch

7. Demographics

Winners: eCommerce, new consumer

Losers: Bricks & mortar, legacy consumer

BAML's take: "The number of grandparents will outnumber the world's children; every second 5 people enter the EM middle class and Gen Z overtakes Millennials."

Source: Bank of America Merrill Lynch

8. Quantitative failure

Winners: Keynesianism, gold

Losers: Financial assets, Monetarism

BAML's take: "Monetary policy measures are proving less and less effective at boosting corporate and household "animal spirits."

Source: Bank of America Merrill Lynch

9. Recession

Winners: Inflation, real assets, infrastructure

Losers: Growth, credit, deflation

BAML's take: "Record numbers of FMS investors think the global economy is late-cycle, the bond market bubble is set to unwind and populism is likely to be inflationary."

Source: Bank of America Merrill Lynch

10. Peak globalization

Winners: Local markets, real assets

Losers: Global markets

BAML's take: "The end of unrestricted free movement of labor, goods, and capital around the world."

Source: Bank of America Merrill Lynch

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