Investors need to keep 3 big picture trends in mind when picking ASX shares, an expert has warned.
According to AXA IM core investments chief investment officer Chris Iggo, the issues perplexing stock markets earlier this year seem to be irrelevant now.
"Worries about the economy overheating appear to have been overdone as the Delta variant [of COVID-19] reminds us that the battle with the pandemic is far from over," he said.
"Bond yields have responded accordingly and investors should prepare for the possibility that the US 10-year yield hits 1% again soon."
But while the coronavirus still occupies everyone in the short term, there is still a massive long-term worry that needs to be addressed.
"The planet is overheating and climate disorder is very evident," said Iggo.
"Carbon reduction will become one of the most important investment strategies as investors respond to the urgency of combating climate change."
With these forces in mind, Iggo suggested investors consider 3 major themes for the future when picking shares in the present.
We've hit peak air travel
The pandemic might have brought forward an inevitability, according to Iggo.
"Some of the things that spring to mind include the notion that peak air travel is well and truly behind us until an economically scalable sustainable alternative to jet fuel is developed."
This could mean trouble for ASX shares such as Qantas Airways Limited (ASX: QAN) and Air New Zealand Limited (ASX: AIZ).
Work-from-home is here to stay
A trend that may have never entered the mainstream if not for COVID-19 is working from home.
And Iggo reckons life will never be the same again.
"The 'working from home' genie is not going back in the bottle," he said.
"The machismo displayed by some financial institutions insisting on full time back in the office is unlikely to be the norm across the private sector."
This means that investors must look for ASX shares that'll benefit from lifestyle changes.
"There are long-term implications for urban planning and infrastructure spending, on the demand for smart-housing and on how much households spend on leisure relative to commuting."
Blockchain technology will shake up ASX shares
The database technology called blockchain isn't just about speculative cryptocurrencies.
Iggo thinks the system, which allows decentralisation of centuries-old financial processes, is set to shake up every part of the sector.
"On the financial side, blockchain technology is likely to lead to changes in bank operating models, on payments systems and potentially even on financial instruments like equity and mutual funds," he said.
"Decentralising all kinds of activity has become desirable and achievable which has huge organisational implications."
