Last year I had a bit of fun seeing how the unlikely predictions of Danish investment bank Saxo Bank stacked up against the realities of 2020. Their score of 1.5/10 last time around was forgivable in a year where we were unexpectedly rocked by Covid-19. Yet the novel coronavirus ain’t so new anymore, leaving their 2021 predictions without an excuse for another poor performance…
1. Amazon goes international, literally
Amazon is worth more than 90% of global GDPs, but failed to acquire Cyprus as was foretold. The behemoth company did acquire MGM in 2021, but haven’t gone full Bond villain by buying a whole country. Yet.
2. The French invite the Germans in this time
The crumbling French economy was supposed to see Les Français inviting their German neighbours over to discuss an ECB bailout. Institutions such as Air France and Eurostar have required bailouts in 2021, yet the beleaguered economy has just about held it together. Public debt has been stably high, remaining at 115% in 2021 – shy of the >120% predicted.
3. Something, something, something Blockchain
Fake News is a malicious chimaera of digital misinformation, and blockchain technology was pegged as its Bellerophon. Unfortunately the hero is still putting on his armour, as distributed ledger technology hasn’t quite slain the beast just yet. Verification of news sources is one of the (many) mooted uses of the power of the blockchain, though remained more theoretical than practical in 2021.
4. Digital Yuan torpedoes US Dollar
China’s government-sponsored digital currency, the eCNY, has caused less of a stir than predicted. True, the US dollar weakened against the Renminbi during 2021, but not drastically so. Concerns persist over a Chinese financial crisis, triggered by defaulting real estate giants Evergrande, and there was a government-led crackdown on technology companies that in total wiped ~$1trillion from their value. Yet apparently 10% of the population already have wallets for the new CBDC, a promising statistic if it’s not hyperbolic propaganda.
5. Fusion technology leaves clean energy green around the gills
Fusion technology hasn’t made the leaps and/or bounds that were predicted and we’re still waiting for the utopian energy-abundant society it will bring.
Despite this, clean energy equities have certainly had the wind taken out of their…turbines this year. This seems anomalous given that:
1. Most equities have enjoyed huge gains this year
2. Green is still the new black.
Paradoxically the burgeoning popularity of conscientious investing may be partly responsible for this as the space becomes increasingly overcrowded:
When the bubble pops will we still be predicting a bright,
orange green future?
6. UBI decimates concrete jungle
Covid-19 and WFH lit the touch-paper on the relative urban exodus. In August, prime London commuter location Winchester became the most expensive UK city to buy in. Indeed my own, significantly smaller, town saw an influx of cash homebuyers from the city, swapping their studio shoebox in the big smoke for a sprawling mansion in the sticks.
UBI is invariably successful when implemented properly but it’s yet to become a significant driving force, certainly in the UK. Shorting REITs, as was recommended by the predictors, would have left you out of pocket for sure.
7. Dividends for all
Although it’s a lovely idea, the mooted Citizens Technology Fund and its Disruption Dividends have failed to come to fruition. The aim of the fund would be to “avoid deepening injustice, but also political upheavals, social unrest and systemic risk“. Unfortunately it feels as if all of these issues have gotten worse in 2021, not better.
8. Vaccines save the day, for some
The advent of Covid vaccines did indeed boost more than just immune systems. The UK economy’s recovery continued (albeit in slow-mo), unemployment fell by ~1% during the year and inflation has soared from <1% to nearly 4%. The rise in corporate bond yields was more blunt needle than sharp spike, but they rose nonetheless. If you had shorted junk bonds as recommended you would have come out on top, certainly if you timed things correctly with Omicron’s entrance stage left.
9. All that glitters is not gold
A bumper year for everyone’s second-favourite shiny metal failed to materialise. Silver price actually decreased in 2021, rather than the 100% increase that had been predicted.
It’s been a shoddy year for precious metals all-round, perhaps unsurprisingly given the great return on equities in 2021. However, the murmuration over equity overpricing, bubbles and dotcom comparisons grows louder, so a sudden migration to gold & friends could well materialise if (/when) the stock market turns south.
10. Emerging markets – assemble!
The technology trifecta (techfecta?) of satellite-based internet tech, fintech and drone tech was supposed to ignite the rocket fuel, vastly accelerating growth in the emerging markets.
Instead the engine spluttered and cut out in low orbit, and prices have come tumbling back down to Earth. The performance of various Emerging Market equity ETF’s has been less than stellar, and EM currencies have been fluctuant at best.
The prediction does, however, reference the “ongoing revolution in fintech payment and banking systems which have already given billions of people access to the digital economy via their mobile devices“. Bitcoin adoption as currency in El Salvador was certainly revolutionary, so I’m going to award a half point here!
Final score: 1.5/10
Verdict: As consistently bad as the French econcomy. Très bien!