Fidelity International has identified structural inflation as a significant and lasting factor affecting markets, driven by government deficits, AI investments, low unemployment, trade barriers, and energy disruptions.
The firm suggests that central banks may have prematurely declared victory over inflation, as developed markets are experiencing their sixth consecutive year of inflation above target levels. In light of this, Fidelity recommends that investors consider stocks with inflation-linked profit streams, particularly highlighting the strong performance of Japanese banks.
Additionally, companies in the AI supply chain, especially those in South Korea, Taiwan, and China, are seen as potential beneficiaries of mid-term shortages and price inflation due to rising AI demand. For commodities, Fidelity favors gold as a reliable store of value, along with selected metals and mining companies that align with trends like electrification.
The firm emphasizes the importance of diversification during prolonged inflationary periods