- A "tectonic shift" in manufacturing is about to bring supply chains and jobs back to shores that exported them in previous years, Bank of America says.
- Investors aren't prepared for the shift, the bank says - buy automation, industrial, and bank stocks in North America, as well as South East Asia and India, to gain exposure.
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Investors should buy automation, industrial, and bank stocks in South East Asia, India - and now, North America as well.
It's part of what Bank of America deems a "tectonic shift" in manufacturing that will bring parts of supply chains back into developed markets. In a survey of the bank's analysts, who collectively cover 3,000 firms, Bank of America found that firms in over 80% of 12 global sectors have begun reshoring their supply chains.
Half of sectors in North America said they planned to reshore.
Behind the shift is a host of factors: greater investor attention toward environmental, social, and governance metrics has put pressure on companies to reduce their carbon footprint and understand the employment practices of the firms they outsource to, Bank of America said. Automation has also reduced the margin companies can save on labor by looking offshore, and tariffs have eaten into cost savings, the bank said.
China has the most to lose from reshoring, Bank of America said.
Plus, investors aren't prepared, as indicated by fund positioning and cheap valuations for manufacturing names, Bank of America said. To gain exposure to that reshoring, investors should buy automation, industrial, and bank names in North America.
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