With the Coronavirus pandemic still raging, investors Worldwide are left thinking what will come next in terms of investment trends ( i.e. will value stocks finally be back after a lackluster decade?) and of macroeconomic shits (i.e. will stock markets in Emerging Markets in Europe catch up with the U.S.?). While nobody can predict the future, some trends are clearly emerging as potential winners in the next decades. In this article, we will analyze some trends specifically related to Emerging Markets. The trends highlighted in this article are not to be taken as investment advice but can give readers a general idea about what most industry professionals think will be key sectors driving global growth in the next decades.
Cloud Computing This sector has already grown exponentially in recent years and has received a further boost from the pandemic, which has forced many companies to accelerate their digitalization process. Big tech players and small companies alike are heavily investing in the cloud business. While I cannot make names here, I would at first look for strong local partners for American Big Tech companies in Emerging Markets as a possible long-term growth investing play.
While oil and natural gas are not set (and will not) disappear overnight, government intervention and regulations together with cheaper cost of production can be a strong driver of growth for the renewable energy sector. As cities grow in size and the standard of living rises, tackling pollution will be an increasingly pressing task for governments in Emerging and Developed Markets. The trend is well underway in Northern Europe but investing in renewable energy producers in the Emerging Market, while arguably riskier, might provide the best long-term opportunities. Water
Unfortunately for all of us, skyrocketing population growth in Emerging Markets and worsening climate will likely make drinkable water a precious commodity in the next decades. While it is difficult to find pure-play companies in the segment, more water companies will spring in Emerging Markets driven by exploding demand. It is not by chance that one of the last new Chinese Billionaires is a bottled water entrepreneur.
Defense Companies
Another megatrend is driven mainly by population growth and the related inevitable social unrest (which is already increasing dramatically everywhere due to the economic fallout from the pandemic), defense corporations will probably play an important global role in the next years. A particularly bright spot in the segment will probably be surveillance companies tailored to urban settings. As countries work towards securing their supply chains, strong local players in the defense sector might arise in Emerging Markets in order to avoid over-reliance on foreign suppliers.
Another economic trend already well underway might be further accelerated by people’s recent reluctance of handling banknotes during the pandemic fearing possible contamination. While most transactions in Emerging Markets still happen through physical cash, the shift to cashless forms of payment seems inevitable given the advantages in terms of convenience and transaction tracking.
Healthcare Another segment pushed by population growth, demand for healthcare service of almost any kind will likely rise in Emerging Markets as it is now rising in Developed Markets. One driver of this increase will be more people of old age and the relative increase in the incidence of diseases related to longer life expectancy. Companies involved in the modernization of Healthcare services will likely be winners as well.
This is definitely a non-exhaustive list of potential successful sectors to consider for the next decades. Non-professional investors should thoroughly research the companies they are interested in and seek professional advice when necessary.
Comments