Fidelity says this phenomenon is 'reshaping markets' and recommends stocks to fight it off
Structural inflation, fueled by government deficits, AI investments, low unemployment, trade barriers and energy disruptions, is reshaping markets.
TL;DR
- Structural inflation is reshaping markets and is likely to persist, not be a short-lived phenomenon.
- Central bankers may have declared victory against inflation prematurely.
- Developed markets have experienced six consecutive years of above-target inflation.
- Investors should consider stocks with inflation-linked profit streams.
- Businesses that can directly benefit from inflationary trends and structural shortages, such as banks and AI-related companies, are highlighted.
- Specific opportunities include Japanese banks and technology companies in South Korea, Taiwan, and onshore China, as well as power supply businesses.
- Gold is preferred as a store of value, alongside selected metals and mining companies critical to trends like electrification.
- Diversification is essential during periods of persistent inflation.