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Franklin Templeton’s Stephen Dover says tech and healthcare’s bull run isn’t over

证券市场红周刊 发布于 03月05日 22:48

I have been very fortunate to visit China over 30 times including my first six-month visit in 1982. I have also shared Lunar New Year with my Chinese friends. This year is special because of the global COVID-19 crisis and many of us have relearned the importance of family and friends.  I wish all of the readers a happy and healthy new year.

We continue to see opportunities in global stock markets, especially in China and other emerging markets in Asia. The pace of global economic recovery will be a matter of how quickly people are vaccinated.  I think one country that will benefit quite greatly from this is China.

China has a pretty big impact on emerging markets because many emerging markets will be dependent on vaccines coming from China. Asian economies in general have been well prepared for both the pandemic and the accelerated shift toward a more digital economy. We believe there are plenty of interesting Chinese companies in the technology and old economy sectors that are worthy of investment consideration. China’s latest five-year plan also puts an emphasis on self-sufficiency that may help boost domestic industries over time. We see opportunities in materials and commodities sectors.

There does not seem to be a long-term threat of global high inflations. However, it seems likely that as the economy recovers from the COVID-19 shutdowns, there will be pent-up demand for many products and especially services. This will cause “demand” inflation toward the second half of 2021 and perhaps into 2022.  This is “good” inflation in that it is based on a growing economy.  Since this is not structural inflation, central banks are unlikely to raise interest rates. Thus this inflation should be positive for equity markets.

Many equity investors are trying to look past the current economic and earnings disruptions toward longer-term earnings growth. In a low interest-rate world, we believe investors will continue to look to global equity markets for attractive investment opportunities relative to other asset classes.

The trends that have driven equity markets higher since the start of the pandemic, such as digital transformation and innovation in the technology, health care and consumer sectors, are set to continue in our view. Technology stocks should remain a key beneficiary. The pandemic has only accelerated several long-term secular trends in how people work, shop and interact with others. We believe remote work and e-commerce will only become more entrenched over the coming decade, as technology companies continue to innovate and offer new tools to help manage this ongoing digital transformation. We would also expect any potential infrastructure bill from the U.S. Congress and presidential administration to include some funds for areas of technology such as 5G and greater broadband.

We also see some promising long-term secular growth drivers in the healthcare sector. We expect an aging global population and growing middle class to support demand for a range of medical services and treatments over the longer term. Travel and leisure, meanwhile, is one area that is still under pressure during the pandemic, but we believe it could rebound strongly once travel is safe again. Consumer spending also may not completely return to its old patterns after the pandemic ends, with e-commerce, for instance, becoming more entrenched.

We continue to be positive on the Chinese economy and equity markets in 2021. It is likely that the relationship between China and the U.S. will improve under the new American administration. However, we do not anticipate a material change in U.S.-China relations and believe China will continue to focus on domestic consumption while investing in supply chain localization in order to reduce its reliance on trade and imports. This has significant long-term implications for areas such as consumption, technology and environmental investment.

While we’re positive about many of the longer-term trends driving China’s economic growth, we also recognize the economy’s vulnerabilities. China was the first into the COVID-19 crisis and the first out of it. As conditions normalize and policymakers return their attention to longstanding concerns about excess capacity and unproductive debt, there will be more of an inclination to tighten financial conditions in China than in any other major global economy. Valuation and regulatory risks in China are also generally elevated at present.

Regardless of how the coronavirus progresses and what the broader economic environment over the coming year looks like, we think global investors should keenly focus on individual company fundamentals when making long-term investment decisions.

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