Sustainable investing, bitcoin and health tech could offer higher returns as inflation gathers pace
- Sustainable investing, health tech and cryptocurrencies can offer protection against inflation, banking and finance experts tell the Post’s China Conference
- With the risk of inflation looming large, experts advising investors at financial firms and banks point to asset classes that offer better returns
The uncertainty over central banks’ policy responses to get the global economy on track in the post-Covid-19 era is causing inflation worries to rise, leading investors to look for higher returns, banking and finance experts told the China Conference organised by the Post.
The growth outlook remains robust over the next one to two years, said Paul Colwell, head of advisory portfolio group and senior director at Willis Towers Watson.
“[We see] the highest level of uncertainties around inflation in probably three decades,” said Colwell, who expects inflation of 3 per cent over the course of the next three years. “Our concern is whether that would force the Fed to act sooner than they want to act to maintain economic growth.”
The US Federal Reserve has signalled that it would keep interest rates at near zero through 2023.
But that concern was not shared by Julia Wang. The executive director and global market strategist at JPMorgan Private Bank said she believes the Federal Reserve will continue to the economic recovery and abundant liquidity in the market will continue to boost market performance.
“A big pile of cash has been built up, partly thanks to the fiscal stimulus [in the US] … so if you combine the Fed [support] and the abundant cash out there, the current market levels are pretty sustainable in that light,” she said.
The Covid-19 pandemic has heightened investors’ interest in ESG investments, said Eva Lee, the head of Hong Kong equities at UBS Global Wealth Management Chief Investment Office, the dedicated research unit of the Swiss bank’s wealth management arm.
“The pandemic has made people pay [more] attention to ESG or sustainable investment. [What’s] more important is that we are not going back, people will just put more focus on ESG,” Lee said.
She said investors were motivated by the better returns from ESG investing, compared to the traditional approach, although she did not back up her comment with data showing ESG returns were better.
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Is cryptocurrency too risky for China?
Due to bitcoin’s limited supply, as only a finite supply of 21 million bitcoin can ever be mined because of the blockchain’s design, institutional investors are increasingly looking at the oldest cryptocurrency as part of their “anti-inflationary” investment choice, said Quinn.
“Due to the limited supply of bitcoin, it is seen as a [less] expensive protection against inflation compared to other inflation hedges,” he said.
