Zeitgeist overview

India

Economic Miracle 2.0

“Incredible India” is the slogan intended to tempt tourists to India. Incredible India and the high-gloss images of snow-capped peaks, exotic palaces, and palm-frond-edged beaches basking in the sun. The vision of an “Incredible India” was also what investors found so exciting about the subcontinent. A fast-growing and highly-qualified population, fluent in English and computer-literate, these factors alone should have ensured the country scored high in the international sweepstakes. But for many years everything remained nothing more than a promise that got lost somewhere between the morass of political inefficiencies and China, India’s overly powerful neighbor and regional rival. Something has now changed and the country could in fact actually become “incredible”.

Rising Rates

Turn after 5,000 years

The central bankers’ mantra? Interest rates have to be low in order to make certain the real economy gets the loans it needs. They’ve been saying this in the US for years, as they have in Europe and Japan. However, nuances have crept into the mantra ever so covertly. As a result, bond investors need to listen very carefully. But let’s start at the beginning.

Driverless Cars

Deluxe commuting – Get in, drive off, sit back

Massive tail fins and blinking chromed trimming – back in the 1950s people were already dreaming of simply getting into a car and being driven to their destination. Without studying a map or having to concentrate the whole time on the traffic. Back then it was a vision. And today? Evidently a realistic goal. A trip where investors may be along for the ride.

eHealth

By iPhone to iDoctor

The next time you consult your physician may be by e-mail or Skype? This is a long way off for patients in Germany: First the phone call, then the diary entry, then the waiting room. And only then the consultation. Many countries are technologically so far advanced that things could be quite different. And investors are fighting for those companies that will enable medical care 2.0.

Green Yield

Supporting investors and the environment

Floods, drought, tsunamis, the Munich Re study lists them all and carefully tots the natural disasters up. And concludes that the number of “damage events” between 1980 and 2015 has almost quadrupled. These statistics are by no means about surprising exceptions for the figures are steadily climbing, or so the re-insurers noted in March 2016. At first sight it the politicians who must to act, for example by introducing international treaties and agreements in order to brake the global warming underlying this process. That said, corporations must also act as their production processes contribute to the warming. And the more the companies rethink things, the better for their investors, too. A linkage that is becoming ever more important.

Green Pioneers

Doing well by doing good

Elon Musk is a colorful figure in company circles. After all, the entrepreneur who tends to favor smart casual created the electric car marque Tesla seemingly out of thin air, and with his SolarCity is investing billions in renewable energy. And he makes no secret of it. Not only does he provide headlines for the press, but also gets investors thinking. Because Musk shows that business and ecology can blossom in a symbiotic relationship, that you can make money with “sustainability.” As a result, the topic is increasingly taking the public limelight. Even if things sounded very different at the beginning.

Batteries

The Renaissance

“The factory is the machine that builds the machine,” says Elon Musk. The CEO of Tesla Motors is talking about his new Gigafactory, a vast production plant now taking shape in the Nevada desert. Tesla has long imported lithium-ion batteries from Asia, but to meet its target of producing 500,000 cars a year, it needs to build them nearer home. “Tesla alone will require today’s entire worldwide production of lithium-ion batteries,” the company says about its goals. The Greek word “giga-“, which means “billion”, has a number of Tesla interpretations, including the Gigafactory’s planned annual battery production capacity of 35 gigawatt-hours.

Robotics

Brains without hearts

Robotics and automation are one of the fastest growing parts of the world economy. Since the start of this decade the technology has advanced, allowing robots to move from being a specialised tool with limited applications, to become mainstream in the automotive sector.

Emerging Market Bonds

Better than no interest

Bonds from emerging countries like Brazil, Russia, Mexico and elsewhere are a major investment theme, a Zeitgeist. They offer quite an attractive yield, often 5, 6 percent or more, which seems reasonable, relative to their risk, at a time when interest rates on bank accounts are zero or very low.

What type of risk is there, alongside that kind of interest? There would not be direct currency risk, since this Zeitgeist is focussed on bonds denominated in (or hedged into) euros, not in the local currency of the issuing country. But there is credit risk. Argentina, for example, defaulted on its bonds less than ten years ago, paying back only a fraction of their value, and has only just settled a complex lawsuit, while Venezuela looks set to default soon. And even if a country does not default, the price of its bonds can fall quite a long way when investors get scared. That happened with Russia, for example, a couple of years ago, even though the prices later recovered most of their losses.

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