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Kickstart Accelerator - How societal change drives investment opportunities

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Supertrends - How societal change drives investment opportunities

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Kickstart Accelerator - How societal change drives investment opportunities

  1. 1. Supertrends – How societal change drives investment opportunities Dr. Nannette Hechler-Fayd’herbe November, 2018
  2. 2. 2November 2018 Last data point: 06.11.2018 Source: Bloomberg, Datastream, Credit Suisse / IDC Total returns in local currency Financial markets 2018: A complicated year 4.20% -3.09% -4.01% -5.92% 1.28% -1.18% -1.91% -4.74% 3.18% 0.58% -3.46% -5.03% 0.01% -0.45% -5.02% -5.36% -5.82% -7.42% -10% -8% -6% -4% -2% 0% 2% 4% 6% WTI Crude Oil USD/CHF HY Bonds (US) USD/JPY MSCI AC World MSCI Switzerland CS Swiss Liquid Bonds ex Eidgenossen Investment Grade Bonds (Global) Bloomberg Commodity Index GBP/USD HFRX Hedge Fund Index Emerging Market HC Bonds MSCI UK EUR/USD MSCI EMU MSCI Japan Gold MSCI Emerging Markets Alternative Investments Bonds Currencies Equities
  3. 3. 3November 2018 Supertrends. Investing in societal change One year on.
  4. 4. 4November 2018 Angry Societies Multipolar world Global average cost of cyber crime Source: Accenture, Ponemon Institute, Credit Suisse Online spending – growth potential in EM (% of retail done online)  Popular disenchantment still drives populist electoral wins in Developed and Emerging Markets  Global trade skirmishes have grabbed market and media attention since early 2018  Geopolitical tensions regularly resurface (Iran deal, Russia/West, China Seas) Domestic economy first Security & Defense Civil and Cyber Emerging market consumers Young, online and socially mobile National champions & brands In a world of higher trade frictions Source: Credit Suisse EM Consumer Survey 2018 0 0.05 0.10 0.15 0.20 0.25 Mexico India Russia Brasil Italy Turkey Japan Germany USA Denmark South-Korea UK China 7.2 7.6 7.7 9.5 11.7 7.0 7.5 8.0 8.5 9.0 9.5 10.0 10.5 11.0 11.5 12.0 2013 2014 2015 2016 2017 m USD Costs (in USD) Average 1
  5. 5. 5November 2018 Source: Company data, Credit Suisse Global Markets estimates Number of records lost to data breaches is increasing at an exponential rate Angry societies – Multipolar world Security and defense
  6. 6. 6November 2018 Survey countries include Brazil, China, India, Indonesia, Russia, Mexico, Turkey and South Africa Source: World Bank, Credit Suisse Consumer Survey 2018 Angry societies – Multipolar world Emerging market consumers Consumption share of global GDP (%): G6 versus selected EM countries
  7. 7. 7November 2018 Infrastructure – closing the gap New sub-theme!: Telecom Infrastructure G20 Buenos Aires Summit 2018 USD 94 bn trillion investment gap by 2040 Infra-investment gap meets yielding-asset gap  PPP investment opportunities Transport Number 1 infrastructure focus Energy & Water Unleashing EM economic potential and DM sustainability Affordable Housing Scarce in DM and EM New! Telecom Infrastructure Catalyst 5G Telecom Infrastructure  5G technology to reach a market volume of USD 33 bn by 2026 with a CAGR of 50.9%  EU promotes its vision of the “Gigabit Society” by 2025  Global fixed-line communications equipment market is expected to witness a CAGR of 4.1% between 2017 and 2021  USA and China already seem to be competing to build out the superfast network the earliest possible Africa and LatAm most underspent on infrastructure Public and private infrastructure investment 2017 (% of GDP) Source: World Bank, Credit Suisse 0 1 2 3 4 5 6 7 8 Sub-Saharan Africa Latin America & Caribbean Central Asia South Asia Middle East & North Africa East Asia & Pacific 2
  8. 8. 8November 2018 Technology at the service of humans A new digitalization angle!: Blockchain Healthtech A solution to rising health costs Artificial intelligence Inevitably needed with data explosion Digitalization/Blockchain The modern era gold rush Industry 4.0 Tightening labor markets to propel robotics Digitalization/Blockchain  Big Data: unstoppable but at risk of regulation  Focus on experience-enhancing rather than disrupting digitalization  Blockchain to provide efficiency gains which form core principle of technological advantages  Tokenization of products but no view on Cryptocurrencies Growing usage of VR and AR devices Source: Statista, Digi-Capital, Credit Suisse VR/AR services for knowledge and education On the way to mainstream media 15 2010 15 20 20 30 10 18 30 45 65 100 2 75 210 355 460 0 50 100 150 200 250 300 350 400 450 500 2016 2017E 2018E 2019E 2020E 2021E Installedbaseinmillions Smartglasses AR/MR Console/PC VR Mobile VR Mobile AR (replacement cycle) 3
  9. 9. 9November 2018 Expect strong growth in AI markets worldwide Source: Statista, Credit Suisse Technology at the service of humans Artificial intelligence
  10. 10. 10November 2018 Source: Statista, Credit Suisse Healthtech market sales expected to grow materially Technology at the service of humans Healthtech
  11. 11. 11November 2018 Silver economy Investing for population aging Changing demographics Source: United Nations, Credit Suisse Life & Health insurance/ Asset managers Individual old age funding Old age diseases Structural Pharma driver Senior lifestyle Seniors have time and money Senior housing Integrated housing and services  2.1 billion people globally aged 60+ by 2050  80% of elderly people likely to live in emerging markets  75% of healthcare spending is on the elderly  Euromonitor projects spending power of seniors to double to USD 15 trn by 2020 7.9 16.1 7.5 2.3 3.8 4.5 4 10.4 2.3 1.4 2.1 2.72.9 5.5 1.7 1.5 1.9 2.2 0 2 4 6 8 10 12 14 16 18 World Africa China Japan Europe US 2015 2050 2085 Potential support ratio of workers/ retired Cohort by age-group Wealth of seniors 34% 28% 24% 20% 20% 19% 17% 21% 5% 11% 2015 2020 2025 2030 2035 2040 2045 2050 Gen Z (0-19) Millenials (20-34) Gen X (35-49) Baby boomers (50-69) Silent population (70+) Source: United Nations, Credit Suisse Source: ECB Household Survey April 2017, US Census Bureau 2013 data, Credit Suisse Exchange rate as of 2013 as EU data taken between 2012–2014 0 50 100 150 200 250 300 < 35 35-44 45-54 55-64 65-74 75+ '000 USD USA EU Germany France 4
  12. 12. 12November 2018 Millennials values New! ESG overlay on the whole Supertrend India China Indonesia USA Nigeria Brazil Philippines Russia W. Europe 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% - 200 400 600 800 1,000 Gen Y and Gen Z population (in mn) GenYandGenZas%ofcountry'spopulation 0% 10% 20% 30% 40% 50% 0 10 20 30 40 50 60 70 2016 2018 2020 2022 2024 2026 2028 2030 Pure EVs Plug-in hybrids (PHEV) Hybrids (HEV) Mild hybrid (48V) Fuel cell Electrification rate, rhs in mn units 50% of the world population is less than 30 years old  1st Digitalized generation  A truly global generation  Post Modern generation The generation that wants change  ESG : Companies must display exemplarity, values, engagement in Environment, Social and Governance matters  ESG Overlay across the entire Supertrend stock universe Sustainable business and investments Mainstream through Millennials Fun, Health and Leisure Millennials’ consumption priorities Digital Natives Connected 24/7 Millennials Housing Small, central, shared, affordable Clean Energy Caring about tomorrow’s world Emerging markets: Home to the majority of the Millennials Electrified cars development Source: Credit Suisse estimatesSource: United Nations population division 2017 revision, Credit Suisse 5
  13. 13. 13November 2018 Source: Newzoo, Credit Suisse Esports audience growth projected to grow at 13.6% between 2018-21E Millennials’ values Fun, health and leisure

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