Our macro assumptions are that 2021 GDP growth will be above trend, the dollar will weaken, there is a very high chance of a vaccine, and inflation expectations will rise quite sharply. We see 10 opportunities in global equities:

European renewables and grids: Very supportive macro (fall in real rates and stronger euro); c11% FCF yield on maintenance capex. Wind capacity up 15-fold over the next 20 years. Carbon price to $100 p/ton by 2030. Grids need to be upgraded (RWE, EDP, National Grid).

Mining for real asset exposure. A China play when lead indicators of Chinese infrastructure investment remain strong. A potential vaccine play (as IP normalises). Benefits from G7 governments’ focus on infrastructure. Not technically disrupted. Copper and platinum are required for EV and renewables. 17% FCF yield on maintenance capex (using spot prices). We highlight Anglo American.

Construction materials: US housing is set to grow 20%+ on very low real bond yields. Governments increasingly focus on infrastructure (where the multiplier is 1.7x). Not technically disrupted. We like stocks exposed to insulation (the UK, Germany and France alone have c.$22.5bn of announcements) – eg TopBuild, and aggregates and cement – CRH and Lafarge.

Industrial gases: The move from a six- to a three-player market leads to a quadrupling of its value creation on CS HOLT®, but the P/E relative to growth stocks is unchanged. Above all, 20% of sector revenue is from hydrogen. McKinsey predicts hydrogen is a $2.5trn market by 2050. Tends to outperform as PMIs fall. Air Liquide and Air Products are Outperform-rated.

GEM overweight: GEM currencies are close to 20-year lows against PPP, but the basic balance of payments surplus is at a 16-year high. Equity valuations are close to 16-year lows (sector-adjusted P/E). A weaker dollar and a fall in TIPS is fuel for GEM. Within GEM, we agree with CS APAC strategist Dan Fineman’s top pick of Korea.

On GEM, we also highlight alcoholic beverages: 55% GEM exposure. Abnormally cheap versus their US peer group and food producers. A potential vaccine play. Typically amongst the least disrupted of the consumer staples. We highlight Pernod and Heineken.