Investment Outlook: 2021 Looks Bright

Investment Outlook: 2021 Looks Bright – a blog by Craig Clay, President of Global Capital Markets, DFIN

Despite the pandemic, 2020 was the biggest year for IPOs since 2014, and I am confident that the positive trend will continue in 2021. It’s already getting off to a fast start with the Wall Street debut of mobile game developer Playtika Holding (PLTK), which benefits from strong videogame demand and a popular line-up of titles like Slotmania, Bingo Blitz, and Board Kings.

I know 2021 will not be fun and games, but one reason I’m so optimistic about this year is that I believe monetary policy will remain consistent. Easy money will continue to backstop the market and boost investor confidence.

There’s also the popularity of Special Purpose Acquisition Companies (SPACs) to consider. Last year, in the investment community and the world of finance, SPACs were all the rage. In fact, they made up more than 50 percent of total IPOs in 2020. SPAC launches quadrupled in 2020, and his trend is only going to continue in 2021. The capital markets love SPACs because they offer a place to invest in individuals, teams and ideas. In addition, they are efficient and effective and provide an opportunity to earn outsized returns.

That’s the good news. The economic recovery in 2021 presents more of a mixed bag. I think we will continue to see a K-shaped recovery. At the top end of the year, industries like technology, medical and life sciences, will continue to thrive. Later in the year, the hospitality industry, focusing on travel, leisure and restaurants, will shine.

Overall, the IPO, M&A, high-yield and private equity markets will contribute to the overall optimism.

All told, the pieces are in place for a solid year. As the COVID-19 vaccine rolls out, we may even see upside surprises. In the second half of 2021, I am hopeful that we will start to see all areas of business and industries coming back to a new normal.