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The destruction caused by covid-19 has resulted in a level of uncertainty in the global economy that we haven’t seen for decades. Though the pandemic itself may become history as the world gears up for large-scale vaccination, the disruption it caused will probably continue to linger and dominate the markets this year as well. In this backdrop, we outline five major market trends to look out for in 2021.

Exponential growth for some, a matter of survival for others: Covid-19 has been destructive for most participants in the economy, but there are a few exceptions for whom it has delivered growth. Broadly, travel, tourism, real estate, outdoor entertainment, and more fall in the former bucket. Digital entertainment, online payments, broadband services, online shopping, personal computing and remote working or learning tools, make up the latter group. As life gradually returns to normalcy, we will see the former group trying to bounce back, while the “winners" try to retain their momentum.

If work from home (WFH) becomes the new norm, it will shift some of the economic activity to smaller towns and cities. Though this will negatively impact some sectors in major cities, it will create growth opportunities for the same elsewhere. WFH will also accelerate broadband and technology adoption in smaller towns, creating formal and skilled markets over time.

More regulatory focus on big tech: Despite some hiccups, Big Tech (Apple, Amazon, Facebook, Google, Microsoft and others) performed exceedingly well in 2020 with most of them benefiting from the pandemic. However, many of these companies will have a different kind of threat to deal with in 2021—one that might define how they operate and grow in the coming decade. Regulators and politicians in the US and Europe have launched multiple high-profile antitrust investigations and have filed far-reaching lawsuits against these companies for allegedly misusing their platforms to harm or acquire competitors. Even if this regulatory pushback doesn’t cause any significant material harm to these companies, it will surely force them to slow down their inorganic growth through acquisitions.

Investments will become increasingly speculative: Many investors have backed high-risk and high-return ventures in the past, but the scale of investments and the nature of risks grew much bigger in the current decade. The spate of massive investments in cryptocurrencies, electric vehicle (EV) startups, etc. perfectly illustrate this trend. While the EV industry is not purely speculative like cryptocurrencies, it has its fair share of unrealistic valuations with Tesla leading from the front. The very fact that startups like Innoviz and Nikola have successfully gone public even before they have a single commercial product in the market should tell us how speculative many of these investments have become. Expect this trend to continue, as all that it would require are a couple of “success stories" and the resultant disproportionate media buzz to keep the show going for years.

Geopolitics will define the fate of many companies: As China makes aggressive moves to go up the value chain in the global economy, there is growing discomfort in the West and Europe over this trend. China is relatively better placed than others to increase its share in the global economy in the post-pandemic world. Expectedly, the opposition to its rise will also grow, particularly when it is seen as the reason behind the global outbreak. This anti-China sentiment will create a temporary opportunity for local companies to grow as we have witnessed in India.

Streaming services unlock the next level: Video-on-demand streaming services have benefited immensely from a surge in demand in 2020. More importantly, the pandemic also helped them to significantly negate the bargaining power of theatre chains. Production houses across the globe were finally able to (or forced to, in some cases) release their big-budget movies on streaming services directly as movie theatres were no longer in a position to discourage such moves through boycotts.

This trend will continue in 2021 as well. Actually, it is set to become even bigger as Warner Brothers has already announced plans to release all its 2021 movies on its streaming service HBO Max and in theatres simultaneously. With some of the biggest production houses in Hollywood embracing streaming, it is only a matter of time before this becomes the norm for all new movie releases. While this is great for consumers, it has the potential to destroy entire economic ecosystems surrounding the movie theatre business beyond recovery.

All in all, 2021 will be important for the global economy. We will see signs of what the post-covid world will look like. We’ll be able to observe whether life will return to the pre-pandemic normal or a new post-pandemic normal emerges, irreversibly altering the trajectory of many constituents in the global economy.

Nikhil Kamath is co-founder and CIO, Zerodha and True Beacon .

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