Global Economics Analyst: V(accine)-Shaped Recovery
8 Nov 2020

President-elect Joe Biden will likely have to work with a Republican Senate majority, limiting his ability to implement the Democratic fiscal agenda. Nevertheless, we expect a $1 trillion stimulus package, potentially enacted before his inauguration on January 20. This is less than half of what we might have seen under a Democratic sweep, but it should suffice for a small positive fiscal impulse to US growth in coming quarters.

Visit our Macro Outlook 2021 page for regional outlooks and more.

ESG Sector Roadmap: Utilities
19 Nov 2020

The Utilities sector sits at the heart of the transition to clean energy, making it fundamental to addressing climate change, to limiting global warming and to the overall ESG debate. Despite the growth and increasing cost-competitiveness of renewables, decarbonization is likely to be a multi-year process proceeding at different rates around the world. And many of the ESG challenges within the Utilities sector itself will persist regardless of the path or pace of decarbonization.
See also: ESG Meets Fundamentals: A sustainability assessment of select global Utilities players

China Financial Services: Digital Currency: Reinventing the Yuan for the Digital Age
17 Nov 2020

China is at the forefront of digital currency development and will likely be one of the first countries to issue a sovereign digital currency (known as “DC/EP”). As a gradual replacement for physical cash, in the early stages DC/EP will facilitate small payments for consumables such as meals, groceries and transport, but over time will expand to larger and more complex, value-added services such as government subsidies and cross-border payments.
See also: Asia Economics Analyst: China’s digital yuan and its macro implications

China Credit Strategy: 10 Updated Questions on China's Domestic Bond Market
17 Nov 2020

Developing the bond market has been a major focus for China's policymakers. The past few years have seen tighter regulations on the shadow banking industry, and continuing efforts to reduce the heavy reliance on bank loans. As a result, the securities markets have become a more important source of financing, and the China domestic bond market has seen continued rapid growth.

Europe Gaming Technology: Rapid growth, M&A scope, compelling value; initiate on Embracer and Stillfront (both Buy), CD Projekt (Neutral)
13 Nov 2020

Gaming Tech is a large, rapidly expanding market and we see multiple compelling growth opportunities for European players, including mobile gaming, eSports, increasing prevalence of in-app purchases, the shift to digital distribution and the advent of cloud gaming. We also see scope for industry consolidators to create significant value. Overall, we favour companies in the Europe Gaming Tech space with diversified portfolios, M&A optionality and other growth/margin drivers.

Carbonomics: 10 key themes from the inaugural conference
12 Nov 2020

We hosted our inaugural Carbonomics conference on November 12, with 30 CEOs and key policymakers discussing their strategies to de-carbonize the economy and generate sustainable growth, in front of an audience of c.5,000 investors, corporates, regulators and industry experts. In our Carbonomics study, we argue that Net Zero Carbon is becoming more affordable as technological and financial innovation, supported by policy, is flattening the de-carbonization cost curve. Investors and corporates are driving this clean tech innovation through deep engagement across 10 key themes of de-carbonization and sustainable growth, which we analyze in depth in this report.

Grocery Re-Imagined: Steepening online shift in China
11 Nov 2020

When it comes to trends that will outlive the pandemic, we’re believers in China’s online grocery shift. By 2025, we expect nearly half of the country’s grocery shopping will be done online (roughly 260mn orders a day) as the digital shift continues among consumers and supermarkets, wet markets lose share, and models like group ordering and self-pickup expand to lower-tier cities. Unlike the food delivery market where only one model prevailed, we believe the online grocery market in China will remain relatively fragmented, with multiple models and competition based on supply chain capabilities, capital, user acquisition and execution.

Silicon Carbide: China's SiC supply chain
5 Nov 2020

SiC / GaN (wide band gap semiconductor materials) along with their various applications have been in the spotlight for some time. We recently conducted extensive semiconductor supply chain checks, and the findings support our constructive view on selective local vendors, given: (1) the China home market is the largest power-consuming market globally, and new applications (EV, 5G, cryptocurrency, solar, data center, etc.) are at an early stage, driving the demand for high-efficiency power; (2) lower entry barriers and the slower pace of migration vs. processors or memory; and (3) local customers are diversifying their suppliers to lower risks amid ongoing macro uncertainties. See also: Silicon carbide remains in focus; latest datapoints for EU Tech

Top of Mind: What's In Store For The Dollar
29 Oct 2020

After the US Dollar surged in late March as investors rushed to its safety amid the global onset of the coronacrisis, its value has since declined sharply. As uncertainty about the virus trajectory and the global economic recovery—not to mention the US election—continues to loom large, the key question from here is whether this retrenchment marks the start of a multi-year Dollar down cycle, and, even more fundamentally, an erosion of the Dollar’s dominance in the global monetary system.

China A shares in anatomy: 'A' primer for global investors (Fourth Edition)
28 Oct 2020

2020 has been an unprecedented, challenging, and eventful year, but China will likely deliver 2.0% GDP growth on our economists' forecasts and A shares have gained 15% ytd, outperforming almost all major economies and equity markets globally. The economic resiliency and respectable equity market returns amid the Covid-19 disruptions and continued external pressures reinforce what we view as an under-appreciated investment case for A shares: it's one of the largest, most liquid, growthy, dynamic, underowned, and strategically important asset classes in a diversified global portfolio, in addition to the index inclusion and financial market reform tailwinds that should drive allocation and portfolio flows over time.

Top Projects: The Era of Consolidation
22 Oct 2020

Low commodity prices and tightening financing conditions have historically led to consolidation and market repair in the oil & gas sector, with the late-1990s a good example. History is starting to repeat itself, with three material M&A transactions announced over the past three months. This time the drivers are different (the capital markets' focus on de-carbonization has tightened financing conditions for new oil & gas projects, driving single-project hurdle rates to 20%+), but we believe the outcome will be similar: consolidation driven by cost-cutting and capital efficiency, repairing the sector's damaged returns from a 50-year low.

CEEMEA Banks: Digging into digital
19 Oct 2020

The shift to digital has accelerated during COVID-19 with CEEMEA banks reporting a c.50% increase in digital transaction volumes during 1H20. In our view, this is not an anomaly, but rather a trend which should accelerate.

We see strong correlation between digitalisation levels and operating efficiency and see digital as a key enabler for reducing the marginal cost of transactions and the costs associated with a physical footprint. On our base case, we forecast cost savings of c.10% of the 2022E cost base for our coverage, in aggregate, driven mainly by the shift to digital. Our scenario analysis suggests cumulative cost savings increasing to 20% of cost base if banks optimise their footprint by c.25%, and this could increase our average price target upside for our GS CEEMEA banks to 25%, vs. 10% currently.

Global Automobiles: FCEVs: In for the long-haul?
15 Oct 2020

Hydrogen key driver in de-carbonization of transport: As highlighted in our deep-dive report, Carbononomics: The rise of clean hydrogen, we estimate that hydrogen has the potential to transform c.45% of the cost-curve of de-carbonization. One of the main sectors in this transformation will be transport, including road transportation, where several manufacturers are developing fuel-cell electric vehicles (FCEV) powered by hydrogen that is transformed into electricity.

Global Machinery: Trucks & Engines: What's the outlook for alternative powertrain technologies in global truck markets?
14 Oct 2020

As the world continues to seek ways to reduce carbon emissions, investment towards carbon reduction in Trucking markets is accelerating globally. We believe the case for electrification is most compelling for medium-duty trucks – a subset of the global truck market – while the hydrogen fuel cell case is promising for long-haul routes between points with low electricity costs.

Carbonomics: Innovation, Deflation and Affordable De-carbonization
13 Oct 2020

Net zero is becoming more affordable as technological and financial innovation, supported by policy, are flattening the de-carbonization cost curve. We update our 2019 Carbonomics cost curve to reflect innovation across c.100 different technologies to de-carbonize power, mobility, buildings, agriculture and industry.

Global Strategy Paper: Womenomics: Europe moving ahead
13 Oct 2020

In Europe there are some tantalising signs of progress on women's contribution to the economy: most notably, participation rates for women in the workforce have risen dramatically and continue to move up. In many European countries they are now above rates in the US.

Top of Mind: Beyond 2020: Post-Election Policies
1 Oct 2020

The US presidential election is shaping up to be one of the most contentious and consequential in modern history, making its potential policy, growth and market implications Top of Mind.

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