UOB Asset Management (UOBAM) recently held its annual investment outlook seminar to discuss the megatrends that are shaping the investment landscape, inflation expectations and how investors should position their portfolio in 2022.

The 3D virtual seminar garnered over 1,000 attendees from across nine different countries in Asia.

In the opening interview with UOBAM Group CEO, Thio Boon Kiat, said, “Whether individual or corporate, this new generation of investors have two things in common; they demand digital access and information-on-tap and many are also searching for sustainable investing options.”

Here are some of the key takeaways from their panel of experts:

1. How will Omicron affect the market outlook for 2022?

2022, alongside the already present Omicron variant, is expected to embark on a more mature phase of the global economy with two major economic characteristics of increasing market volatility and lower earnings growth.

This will be the year of a mid-cycle expansion where the key implications are continued growth and economic expansion, rising inflation, rising interest rates, withdrawal of policy support and thus rising risks.

While the pandemic may affect daily life, it is viewed that it will not be a major driver of asset markets in 2022.

2. Will there be any significant difference in the investment space due to demographic shifts?

Asia has rapidly growing young populations of Millennials and Generation Z which provide a lot of upside potential for the investment and consumer market.

Together with higher demand for more quality product and services, the spending behavior of these younger populations gravitate towards areas of digitalisation and sustainability.

The affluence of the middle-class population is also rising, hence there is space to cater to their demand mainly into discretionary spending, healthcare, insurance and wealth planning

3. What are some of the sustainable investing trends we’ll see this year?

Climate-related issues are at the top of the list as we are seeing more and more undesired natural occurrences globally as a result of climate change.

This year, we will see more policies that are expected to support sustainable transition, carbon tax implementation in Asia and more ASEAN countries developing emissions trading systems.

But as we are heading to green transition, it should be done in a fair manner which creates decent work opportunities. Social issues like labor management are material to companies and that investor must keep on looking out on companies’ social practices.

4. Where’s the next big investment opportunity in the digital economy?

While disruptions brought by the web 2.0 era – online shopping and social media – are almost inevitable, it can favor companies in the software, high tech, media, online retail and consumer sectors.

Other sectors such as banking, insurance, capital markets, travel and healthcare may be vulnerable to this disruption, but growth opportunities are there for those who can adapt.

Investors may want to aim for companies with strong network effects, first mover advantage and high growth potential.

Watch the full recording here.

Following the Annual Investment Outlook Seminar, UOBAM has launched their three-part megatrend report:

From PowerHouse to PowerCentre: The Megatrends Shaping Asia’s Economic Leadership in a Post-Covid World.

A number of megatrends prevalent in Asia have increased in potency since the Covid pandemic. These megatrends have the potential to put Asia at the helm of future global growth. We examine the investment opportunities that are expected to emerge or strengthen as a result.

Part 1: Changing Demographics – Available

As in the rest of the world, COVID heightened a number of pre-existing population trends. This further accentuated the change in Asian countries’ age and income profiles, and will have a significant long-term impact on Asian economies.

Part 2: Go Green – Available

The pandemic brought to the fore a wide variety of ESG (environmental, social and governance) challenges. Asian governments, companies, and individuals have taken bold steps in response, setting the stage for profound regional developments.

Part 3: Digital Economy – Coming soon

No other emerging trend has been as powerfully impacted by the COVID pandemic as the shift towards digitisation. Whether it is home schooling, working from home, or e-commerce, Asia’s digital acceleration is yielding unprecedented opportunities.

The report can be found on UOBAM’s website.