The changing face of capitalism: conditions will get tougher for corporations
The past decade has been a golden age for corporations. The coming five years are set to be considerably tougher.
Written by
Luca Paolini
Chief Strategist
Share prices have boomed over the last ten years as the biggest firms grew into behemoths and industries became ever more concentrated.
The winds are beginning to blow cold for the corporate sector from most directions.
Profits surged on lower corporate tax rates, falling financing costs and moderate wage inflation, resulting in record high profit margins – 9.4 per cent for firms that make up the MSCI All Country World Index and 11.8 per cent for US firms.1
The coming five years are set to be considerably tougher. A widespread perception that many of the measures pursued since 2008 have favoured society’s richest and most influential has been stirring a backlash, ushering in an era of populist policymaking that will exact a heavy toll on equity markets.
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