Opportunities on the Horizon: Investing Through a Slowing Economy

Thematic updates | WEALTH OUTLOOK 2023 | MID-YEAR EDITION | 50 5.2 Unusual investment opportunities in an atypical energy cycle STEVEN WIETING Chief Investment Strategist and Chief Economist MAYA ISSA Senior Global Investment Strategist MALCOLM SPITTLER Global Investment Strategist and Senior US Economist JUDIYAH AMIRTHANATHAR Europe, Middle East and Africa Investment Strategist World events and the rise of renewable energy are reshaping the energy landscape. The players leading the charge includemajor traditional energy companies and energy producing nations that see the green transition as inevitable and profitable. Capital scarcity favors leading firms with strong capital positions. ƒ OPEC’s early cuts to output suggests a different market outlook for energy equity and credit investors ƒ The US and other countries are rebuilding energy stockpiles after the war in Ukraine disrupted supply. Ongoing geopolitical conflicts highlight the important role of non-OPEC oil producers like Brazil, as well as renewable energy ƒ European energy companies have been trading at a 40% discount to US counterparts, but have been investing heavily in improvements that could pay off in the near future, potentially narrowing that valuation gap ƒ We expect to see consolidation in the renewable energy sector