Tal Kedem, CEO of Harel Finance: “2020 was a very volatile year but the bottom line is we closed a very strong year in most markets. We see this trend continuing well into the first month of 2021 and with Biden entering the job there are very many expectations for his grandiose plans.
It is likely that in 2021 the channel that will yield the best return will also be stocks – but today we can no longer talk about the market as a market. That is, in 2021 it is incorrect to say that the market has risen, the market has fallen, a bull market or a bear market. In the coming years we will move to speaking the language of sectors – sectors that do really well and sectors that do bad. We have seen this trend since last year both in Tel Aviv and around the world. In our case, for example, we saw cell 35 drop 11% and cell 90 jump 18%. The Tel Aviv Technology Index jumped 38% and the energy sector fell 44%, while banks fell 22%, communications stocks jumped 22%, real estate fell and industry rose. Exactly the same trends we have seen in the world.
In recent months we have seen another leap in the performance of all markets. In the last three months Nasdaq has risen 20%, the energy sector has risen almost 50%, we are entering the reporting season and multipliers in some companies in the technology sector and also in other high places and they will have a hard time not disappointing investors.
How do you deal with this situation?
as per Yaron Dagi, Deputy CEO of Harel Finance, We are in a situation where investors have to deal with negative yields on redemption in installments. As long as interest rates are zero, we will see a flow of funds into stocks.
In 2021 it will be right for stocks to spread outside the US as well, including emerging markets and also to diversify into stocks of small and medium-sized companies. We see this in recent data published in China, for example, Other emerging markets are benefiting from population growth and increasing access to a global economy.
After years of seeing a lack of performance in anything other than US stocks or technology, this year has great potential in other sectors and countries.
According to Kedem, other key sectors that need to be looked at in the future are areas such as the green economy and ESG (environment, society and corporate governance). That is, we look at the conduct of the company in a long list of parameters and here the goal is not only to be good for the environment, but also to be better for the employees, to conduct themselves more correctly. For example, recently there has been a lot of talk about the WhatsApp update that will allow Facebook to pump a lot of information about users. This for example hurts Facebook’s esg rating. A company where the board makes strange decisions, questionable stakeholder transactions – it hurts the company’s ESG rating. I say rating because it’s just like what we know in credit rating. The company receives scores for meeting various parameters.
Last year at the conference we talked about the ESG field. The financial volume of responsible investments a year ago was about $ 30 trillion and today we are already approaching 40 trillion. This trend is expected to continue especially under the Biden administration which has promised to act in the direction of a green economy and responsible investment so all forecasts predict that in the next decade these investments will increase by $ 90 trillion so we say we must be there.
It is true that a large part of the investment in ESG is in Europe. The US, which is the largest and most sophisticated market in the world, is only in its infancy in this area and the Biden era is expected to bounce it forward by a few steps. Lots of institutional investors will increase their exposure to this area. That it is important to customers and investors.
We want to earn for our customers and that is exactly why the field interests us.