President-elect Joe Biden. Photo / Getty Images
A global pandemic did not feature in predictions for 2020, but the assumption that the Covid-19 vaccines will live up to their promise underpins how the business world is sizing up this year. Here are the key trends, people and risks for sectors from energy to technology.
ENERGY
Trend to watch
The turmoil of 2020 did little to encourage confidence in the staying power of fossil fuels. While peak oil demand remains on the horizon, it is not imminent. Consumption will roar back at some point in 2021 but while renewable energy will continue its advance, CO2 emissions will also rise after last year's hiatus. Economic stimulus measures in the US and a weak dollar should underpin crude prices, making the battered oil and gas sector tempting for some investors.
Biggest regulatory risk
International energy policy will move in one direction next year: towards decarbonisation. US president-elect Joe Biden has promised a clean energy revolution, but how much of it happens will be down to Congress and the courts. Working out who has the upper hand will keep the energy sector on edge. In November, the focus will turn to Glasgow's COP26 climate meeting, where governments will pledge more action on emissions.
Person to watch
Gina McCarthy, Mr Biden's pick to oversee climate and energy policy from the White House, is the policymaker to watch. The success of Mr Biden's energy ambitions will hinge on her organisational skills and political nous.
Although she has run the Environmental Protection Agency, as domestic climate tsar Ms McCarthy will need to corral the country's fragmented energy bureaucracy, while also trying to win support from a divided Congress.
What would be the biggest surprise
Deep production cuts by Opec last year eased the worst oil price crash in decades, and the cartel is expected to keep cutting until 2022. But some Opec countries are chafing at the supply restrictions and political frictions are never far away. Indeed, some advisers to Saudi Arabia say it no longer makes sense for the kingdom to keep sacrificing market share to keep rival producers afloat. Still, failure to reach agreement on future cuts would be a surprise and upend forecasts for this year.
CONSUMER
Trend to watch
Sustainability. Consumer goods groups have set ambitious targets for cutting their greenhouse gas emissions and in many cases becoming "net zero". But shareholders will be watching for specifics, including how companies will manage the costs of such plans. With the pandemic disrupting economies, there are concerns that consumers may be less prepared to pay a premium for "green" products. At the same time, Unilever chief executive Alan Jope argues the world is moving towards charging for emissions. "It is inevitable that a price on carbon will come — that will focus everyone's minds," he said.
Biggest regulatory risk
Sugar taxes and other moves to fight obesity. The UK's almost seven-year-old soft drinks tax is viewed as a success after it pushed beverage makers to cut the sugar content of their products; other countries including Malaysia and India have also brought in such levies.
Curbs on junk food advertising and promotions are being introduced in the UK and elsewhere, while the market in sugar substitutes is booming. Makers of processed foods are under growing pressure, while "healthy" food and drinks producers are likely to be the acquisition targets of choice.
Person to watch
Carlos Brito, chief executive of Anheuser-Busch InBev. As well as navigating the challenges of the pandemic, AB InBev has been trying to shift away from the merger machine that made Mr Brito's reputation but also amassed large debts. A share "lock-up" for some of the company's core shareholders, including tobacco group Altria and Colombia's Santo Domingo family, ends in October. The FT reported last year that the group had begun a search for Mr Brito's successor.
What would be the biggest surprise
A merger of Unilever and Reckitt Benckiser. Unilever's decision last year to unify its structure — becoming a UK company rather than an Anglo-Dutch one after 90 years — should make mergers and acquisitions easier. Some analysts have suggested it might look to a potential combination with Dettol maker Reckitt. Both companies poured scorn on the idea, but a surprise combination would herald a return of the megamergers that created Kraft Heinz five years ago.
TECHNOLOGY
Trend to watch
Will the tech sector be left with an almighty pandemic hangover? The rising tide of demand for digital services in 2020 lifted many boats, as working, learning and playing from home took off. There should be fewer video meetings and less take-out ordering by the end of 2021, but the pandemic taught workers new ways to collaborate and opened consumers' eyes to the many conveniences of the digital economy.
Demand for some services will slip but will still be at a new and much higher level than before the pandemic, and many companies will spend 2021 struggling to upgrade their digital capabilities to keep up.
Biggest regulatory risk
The first batch of antitrust cases against big tech companies in the US will not hit the courts this year. Instead, the focus will shift to lawmaking, as Europe and the US push ambitious new legislative agendas. Brussels is further ahead, and the new laws it proposed in the final days of 2020 to curb the power of the tech giants will be echoed in less strident proposals from the US Congress. By the end of the year, the outlines of a broad consensus will be visible: to limit the way big tech companies use their dominant platforms to favour their own services, and to force them to do more to fight illicit content. It will take until 2022 for these new frameworks to make it into law, and even longer to discover if they have any real teeth.
Person to watch
Elon Musk. Who else? Despite becoming the world's second-richest man (after Jeff Bezos) and seeing Tesla shoot to the top of the automotive industry's valuation rankings, Mr Musk still has plenty of room to surprise. For much of the world, his Twitter persona — tech visionary and full-time contrarian, spiced up with a Trumpian blend of egomania and trolling — guarantee attention.
But the scope for real business and technology impact remains high, including what could be the world's first global broadband network delivered from satellites, SpaceX's Starlink. Expect at least one other radical departure as the restless Mr Musk looks for new worlds to conquer.
What would be the biggest surprise
If one of the big tech companies considered spinning off a significant part of its business. Regulatory pressure is building, with critics pleased at the prospect of forced break-ups, though that battle is still years in the future. But there is scope for voluntary reforms that would reduce the risk of big-company sclerosis and unleash promising businesses, while at the same time staying one step ahead of the regulators. Alphabet has already started to unpick some of its "moonshot" projects: a more radical step would be to spin off its cloud computing division, which is developing a very different culture from the rest of the group.
FINANCIAL SERVICES
Trend to watch
The consequences of Brexit remain the big unknown in financial services. Having left the EU, can London retain its crown as the region's financial centre or will its dominance be slowly eroded by European challengers? New York, Hong Kong and Singapore will also be eager for a share of the spoils if London stumbles.
Biggest regulatory risk
European regulators could decide that the €78tn of euro-denominated derivatives currently cleared in London need to be managed inside the EU. This would lead to a massive headache for banks and their customers, who would probably have to pay more to trade as a result. Banks and plenty of other institutions will also need to step up their preparations for the switch away from the discredited Libor benchmark interest rate after a spate of scandals.
Person to watch
Jane Fraser will be the first woman to lead a major Wall Street bank when she succeeds Michael Corbat as Citigroup chief executive in February. The 63-year-old Scot knows she will have to do far more than fly the flag for gender equality. Her task is a daunting one.
Among the big US banks, only crisis-plagued Wells Fargo had a worse share price performance than Citi in 2020. Citi has long struggled to convince investors that it can forge a cohesive strategy from its myriad businesses, which range from a global corporate and investment bank to a large Mexican lender.
What would be the biggest surprise
Europe has yet to see a transformative cross-border merger that would begin to address the continent's disastrous decade in banking. If a big deal were to happen, a wave of consolidation could follow that might create lenders capable of competing with those on Wall Street. More disruptive, still, would be if a major technology company, such as Google or Amazon, expanded their so far limited forays into finance and tried to become full-scale competitors to traditional lenders, asset managers and insurers.
RETAIL
Trend to watch
The gap between retail's winners and losers grew during the pandemic and is set to widen further in 2021. In the US, Walmart and Target have cemented their position as go-to destinations for shoppers and are likely to use some of the additional cash they have generated in the crisis to further integrate their stores and online operations.
For clothing chains and department stores and others hit hard by coronavirus, the problems are existential. Another wave of bankruptcy filings is expected.
Biggest regulatory risk
Retail lobbyists have a close eye on increases to the minimum wage, while antitrust measures against Amazon could ripple through the sector if they come to fruition. But topping the list of retailers' policy concerns is how quickly authorities can get a grip on the pandemic. Few bricks-and-mortar chains can wait until vaccines are rolled out: more lockdowns in 2021 would push more over the edge.
Person to watch
The executive behind some of the sector's most intriguing deals in recent months is not even a retailer. David Simon is a property magnate who runs Simon Property Group, America's biggest owner of shopping malls. The real estate investment trust has been buying up some of its largest tenants, including the department store chain JCPenney, Forever 21 and Brooks Brothers. How Mr Simon integrates them with the property empire will be fascinating.
What would be the biggest surprise
As consumer behaviour returns to normal at some point in 2021, some struggling chains should be able to stage a recovery. Deep-rooted structural challenges facing shopping mall and main street operators will persist, however. Wall Street would be surprised if the laggards somehow find a way to effectively combat the might of Amazon.
It employs about 5000-plus staff in its stores, trade and distribution centres.