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Davos 2022: The great reset – and a lesson in global humility and hope

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Davos 2022: The great reset – and a lesson in global humility and hope

Feb 8, 2022

Political, business, cultural and other leaders attended The World Economic Forum (WEF)’s virtual Davos Agenda sessions on 17-21 January to discuss solutions to some of the world’s greatest challenges. A common theme emerged: the global pandemic has reset everything and taught us a valuable lesson about global humility and the importance of preparedness, but also the power of innovation and hope.

“Whatever normal was, we are not going back to it,” says HSBC Global Private Banking CEO Annabel Spring, who participated in the event. “Technology has accelerated, and people’s expectations have changed. The economic outlook is fundamentally different from what it was two years ago: if normal was low interest rates, low inflation and expansionary monetary policy, that is no longer the case. We are entering the multiverse with a warming planet.

“We will now see a great reset, which will produce bigger winners, bigger losers and greater volatility.”

Healthcare and the technology boom

WEF panellists discussed how nations differed in their response to the pandemic, with varying degrees of resilience. Inevitably, there was a discussion of the ongoing unequal access to vaccines between nations and how to encourage vaccine take-up. Other key themes were the speed of scientific innovation, especially in biotech, and the role of technology, from drones to personal wearables, in delivering healthcare everywhere.

In addition to advancing healthcare provision, the Fourth Industrial Revolution – which includes the combination of artificial intelligence, virtual reality, smart mobility and increased digital literacy – creates a variety of opportunities.

The explosion in low-earth-orbit satellites, for example, is something HSBC has been talking about for years – we think this will be a game-changer, promoting digital inclusion like never before.

Spring notes that the future winners will be those businesses that have the confidence to change and grow, and the cash balances and flows to invest in themselves instead of just dabbling on the edge of transformation. Private companies that can afford to take those bets without the market losing patience may have an edge.

Whatever normal was, we are not going back to it - Annabel Spring, CEO for HSBC Global Private Banking

The future of trade is digital and green

The tech revolution will also have major implications for global trade and the future of supply chains. For example, what changes when trade is recorded on the blockchain? Trading ports become digital platforms, and physical transport becomes more transparent and trackable. It feels a world away from our current supply challenges, but these shocks revealed our dependence on each other, scarce global resources and, of course, semiconductor chips.

And when this data tracking is combined with ESG… The requirements to stop modern slavery and meet science-based targets to reduce emissions are changing the core of trade, as well as the accountability and tracking of it.

Climate innovation was also a hot topic, as speakers argued that technology will advance the green revolution faster than anyone can imagine. For example, green hydrogen as a fuel source can already be used to power ships.

“In this way, environmentalism can change the shape and cost of trade, and that is an investment opportunity,” says Spring. “If the future of trade is green and digital, we will need to work out how to change the rules of trade and modernise existing frameworks to ensure they are fit for the future.” 

Corporates and nations will be tested against these scenarios in order to ensure we ‘build back smarter’ as the global economy reopens.

Investing for a resilient future

This year’s virtual WEF saw a noticeable refocus from economic and political issues to environmental and social ones. The human emotional toll of the pandemic has helped change the conversation, suggests Spring. “Recognising our shared vulnerability has led to a focus on the impact of events on people, rather than corporations or nations, and that is a big shift. There is a humility that comes with this.”

Many of the innovations we have seen recently, from vaccine R&D to green energy to satellite technology, would not be possible without entrepreneurial ambition and private sector capital. Philanthropy has a role to play too. “Innovation-based philanthropy is about being the first slice of capital to invest in new ideas and new experiments to support communities,” says Spring.

Traditionally this has often meant access to education or healthcare, but now new opportunities such as rewilding, while not immediately commercial, has been found to regenerate entire communities around diversified economic and social opportunities. “Meanwhile, the private sector’s role in investing to support the transition to a more inclusive, sustainable economy cannot be understated.”

Global powers have been humbled by the events of the last couple of years, she adds. “That lesson of vulnerability is a healthy one as we look at what’s happening around the world. We’ve been unprepared for a global pandemic; are we still going to be unprepared for climate change? I hope the answer is no, given global cooperation and technological advancements.”

As we look to the months and years ahead, we should use the lessons learned to form connections, collaborate and advance ambitious goals. To build back smarter and create a more resilient future, investor capital and business action will be a key piece of the puzzle.

The messages highlighted during the week’s panels align with many of our structural investment themes. Watch our Global CIO Willem Sels discuss investing in the year ahead, and read more investment insights here.

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