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A time of transition and tightropes

After the jubilation of vaccine day more than a year ago, the world entered 2021 feeling reasonably confident that humankind was on the cusp of beating coronavirus. We were savouring our release from the oppressive shadow of the pandemic. Alas it was not to be, and the newest variant of coronavirus has once again clouded our view of when we might at last enter the Post Covid Era. 

But it will happen. And if the end of a year is a suitable time to declutter portfolios and rethink strategies, the end of a pandemic is doubly so. The world is now a different place: people, governments and markets have been altered by the experiences of the past two years. We have acquired new habits and perspectives that will stick and continue to reshape daily life, and our attention has been focused on societal and environmental issues in a way it wasn't before.

Governments have been lumbered with the challenges of managing and paying down mountain-sized debts and of becoming medical advisers to the population (not always sticking to doctor's orders themselves). Markets have thrived in this environment – awash with money from central banks and new investors – and buzzing with hot sectors (tech, infrastructure, private equity), waves of new listings and bidding wars for the UK’s undervalued bargains. But they now face trickier times. Some investors, eyeing up high valuations, tighter monetary policies and the potential for Chinese contagion, fear a jolting correction or crash may be on the cards. RWC Partners' Ian Lance warns that behind the scenes there are some worrying portents: a recent chart from SocGen shows that almost a third of Nasdaq stocks have lost over 50 per cent of value from their 200 day peak. Yet among highly profitable companies, records are being broken according to JPMorgan. It says that in spite of all the pressures its global team expects the companies it researches to deliver around $2.9tn (£2.2tn) of profits this year, compared with pre-pandemic time when a "pretty strong year" would deliver profits of $2.3tn. 

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