Denmark-based Saxo Bank has published its 10 outrageous financial predictions for 2021.
Continuing almost two decades of tradition, experts at the bank have made the predictions as ‘consensus-smashing forecasts’ that would ‘send shockwaves through the markets’ – but only if they come to pass.
Last year, the bank’s experts made the bold prediction that the South African rand would hit R20 to the dollar, pelted by power problems at troubled utility Eskom, as well as growing debt issues and crumbling governance.
While the South African economy has indeed suffered greatly in 2020, with the issues highlighted by the bank coming true – what was not factored in (or predicted by the group) was the global impact of the Covid-19 pandemic which shoot markets globally.
Instead, South Africa’s rand has faired relatively well, given the market volatility, and is currently sitting under R15 to the dollar – lower than when the prediction was even made.
According to Saxo, its predictions are purely speculative, but are made on the basis of sound economic principles and, in many cases would make sense. However, given the shock of Covid-19 in 2020, it has changed tack.
“For the 2021 batch of Outrageous Predictions, we decided for the most part to don our futurist caps rather than getting too bogged down in market trends and central bank policies,” it said.
“That is largely because the Covid-19 pandemic and the painful US Election cycle have brought what might have seemed a distant future a quantum leap closer, accelerating nearly every underlying social and technological super-trend.
“Simply put, the traumas of 2020 mean that in 2021, the future is now,” it said.
The predictions made by the bank’s experts include:
- Amazon ‘buys’ Cyprus: Online retail giant Amazon will move its EU headquarters to Cyprus, help alleviate its debt problems, and try influence tax laws to get a beneficial rate. It is also predicted that this won’t sit well with the EU, and there will be interventions.
- Germany bails out France: France has a growing debt issue, and companies with high risk profiles. With a negative outlook sticking, it will be forced to go cap-in-hand to Germany for a massive bailout for its banks.
- Blockchain tech kills fake news: As news sources get more blurred and false propaganda reporting spreads wider, tech companies will step in to fight fake news using a blockchain network. Using the blockchain, news can be distributed in an immutable way, with validity checks on both content and the source.
- China’s new digital currency inspires shift in capital flows: China’s experimental blockchain-based digital Yuan could open up the country’s capital markets to foreigners, bringing in a massive shift in capital flows – and will create a currency that rivals the dollar.
- Revolutionary fusion design leads to energy abundance: Advanced AI algorithms will solve non-linear complexities of plasma physics, clearing the way for commercial fusion energy. Reactor designs from MIT already create a viable path to this outcome, and success will see the world as we know it change drastically.
- Universal basic income decimates big cities: The Covid-19 crisis has accelerated inequality, and the measures put in place to supplement lost wages will start a permanent move to universal basic income. But as more people lose jobs due to tech-driven redundancy, or work from home, city spaces and commercial offices are crushed as a result.
- Disruption dividend creates Citizens Technology Fund: Continuing job losses due to technology will give rise to new policy direction, where a ‘disruption fund’ is established that distributes a portion of asset ownership and capital assets to everyone. This alleviates economic anxiety, and boosts entrepreneurship and artisanal crafts.
- A successful Covid-19 vaccine kills companies: The Covid-19 pandemic forced investors into some risky assets and pushed global sovereigns and investment-grade corporate yields to historical lows. An over-stimulated economy, following a successful vaccine, quickly overheats, with inflation shooting up, unemployment falling rapidly, and yields spike. Companies that were already struggling before the Covid crisis are the first to fall as controls get neglected in the wake of the rapid changes.
- Silver gets a major boost from solar panel demand: An inflation spike in 2021, along with excessive liquidity in the market, pushes investors to find any hard assets. Given demand for silver in precious metals and industrials – and growing demand for solar panels where it’s used – it becomes a clear winner, even relative to gold.
- Next-generation tech supercharges emerging markets: Economists discover that growth rates in frontier and emerging markets have been massively underestimated – particularly in the private and entrepreneurial sectors. Investors have a eureka moment, as emerging fintech and satellite internet delivery sets to supercharge the economies.
“In 2020, we’ve fretted about the world becoming ever more fragmented, with biased media and social media algorithms driving everyone to the extremes and towards living in parallel realities. Even an ability to agree on the basic facts seems under threat,” said Steen Jakobsen, Chief Investment Officer at Saxo.
“This year’s set of 2021 Outrageous Predictions generally expresses the hope that these tendencies will reverse, believing that the social mood is cyclical and we can learn from our mistakes, while technological evolution is progressive in nature and always marching forward in the background.
“As 2021 rolls around, we encourage everyone to look in the mirror and do their best to break old habits, to stop assuming that the past trends will always continue and to consider how paradigms are rapidly changing,” the executive said.