Investment Themes 2021
At 1exchange (1X), we understand the instability that 2020 brought – that’s why we want to facilitate your move into 2021 with our foresight.
The economic recovery we’re in is a polarised one – the “K-shaped” economic recovery. Certain sectors will continue to thrive, while others will continue a downward trajectory. We will see investment themes such as agriculture and supply chain taking root in many portfolios — these are industries that are beginning to leverage the power of digital to keep their business thriving, making them potential investment powerhouses. This move towards e-commerce is not stopping anytime soon.
According to Google, Temasek and Bain 2020, consumers who have tried online grocery shopping have doubled, with 3 out of 4 consumers indicating they’ll continue post-COVID-19. This could speed-up future growth once grocers resolve logistical and profitability challenges.
There are also other trends to look out for in 2021. Here are five investment trends that investors will come across in 2021.
1. Stock prices may rise despite a tanking economy
Something unorthodox might happen in 2021. Based on information provided by RiverFront Investment Group’s Kevin Nicholson, firms focusing on profitability in 2021 will create a “divergence between the economy and the market” (Sardana 2020).
Essentially, companies have two ways they can increase profits—either increase sales and revenue, or cut costs. Nicolson believes the latter will be the chosen alternative for many companies. With no end to the pandemic in sight in the near future, this could become a possible global reality. This might mean that there could be many instances where a company’s stock might not be on the up and up, but the same company might actually be becoming increasingly profitable (due to employee cost-cutting measures). This trend is worth considering when you do your due diligence on a profitable company.
It should also be noted that studies on the long-term histories of stock markets and economies around the world show that there’s essentially no relationship between economic growth and stock prices over the long run. For more information on this, NTUC social enterprise MoneyOwl has a blog post explaining more.
2. Fintech— Increasing dependency on digital payments
The Fintech industry is going to continue remaining relevant in the long-term. An exciting area in Fintech that’s going to be seeing steady growth is the digital payments sector. For starters, there will be a surge in demand for such services. Generation Z (Gen Z for short), is set to surpass the total population of millennials by 2020. Gen Z also happens to be the ‘generation of the digital world’—in other words, they are the most tech savvy or tech-exposed generation. This generation will have a higher dependency on the cutting-edge technology that comes with the digital payments sector, resulting in an increased demand for digital payments systems.
Here are some specific trends within the digital payments sector we foresee gaining traction in 2021:
– Biometric Authentication
– EMV Technology
– Mobile-point-of-sale (mPOS)
– Mobile Wallets
– Contactless payments
If you wish to learn more about this exciting sector, our partner Deloitte has an article out that talks about the future of digital payments.
3. The rise of the conscious consumer
Conscious consumerism— what it means, essentially is that a consumer would usually look into a company’s CSR initiatives when deciding if they should purchase from that company. In an age where there isn’t a shortage of good quality products, a company that stands for issues that resonate with people will have the winning advantage. This is also exacerbated by the fact that Gen Z is a generation that has a lot of spending power as well as influence on household spending, while expecting brands to contribute to society.
This blog post by Entrepreneur Asia Pacific explains more on this trend and why it’s relevant in 2021.
This trend lends itself especially to the consumer, food and retail sectors. Some exciting trends to keep an eye out for in this space in 2021 include:
– Plant-based diets
– Sustainable packaging
– AgriTech
– Streaming economy
– Sustainable fashion
4. HealthTech – A once nascent sector, now in its prime
The healthcare sector will generally always be a stable sector to invest in. As society moves towards convenience and remote work (exacerbated by COVID-19), the healthcare sector has been following suit. There has been a rise in applications catered to remote consultations and remote patient monitoring. This umbrella of services in the healthcare industry is known as telemedicine.
According to Google, Temasek and Bain 2020, “HealthTech usage has grown by 4X and has retained its users post-lockdown”. Google, Temasek and Bain 2020 also mention that HealthTech is “well-poised for wider commercial adoption” and that “investment in HealthTech has been rising over the years”.
There has been accelerated growth in these areas in the healthcare industry:
– Robotic Surgery
– AI radiology
– Predictive healthcare analysis
– AI drug discovery
– Longevity tech
5. REITs— Diversify your portfolio with lower overall risk
There has also been a recent trend in real estate investment trusts (REITs) being used to diversify, lower overall risk and/or potentially generate higher returns for investors with equity or fixed-income portfolios. 2021 will see a continuation of this trend, especially because REITs are able to generate income while appreciating in capital.
When deciding on which REIT to invest in, consider which sector of properties you wish to invest in as well as what sort of investment within those sectors you wish to add to your portfolio. Specific sectors might include retail, hotels and healthcare; while types of investments may include real estate debt such as mortgages or earning an income through rental or management fees.
There are 5 types of REITs you can invest in:
– Retail REITs
– Residential REITs
– Healthcare REITs
– Office REITs
– Mortgage REITs
Seeking Alpha has an article about why Housing REITs is their no.1 sector for 2021, and the impact it has had in 2020, if you want more information on this investment theme.
1X has you covered
Now that you are aware of some of the investment trends that 2021 has to offer, get in touch with our investor sales team to get started on diversifying your portfolio with trending sectors today. Our team will be delighted to arrange a phone call with you. Alternatively, drop us an email at contact@1x.exchange, and we will get back to you shortly.
1exchange has an array of FIT™ digital assets suited for any risk appetite. Choose between our Capital Preservation Investments, Higher Yield Investments, Late-Stage, High-Growth Investments and/or our Private Funds. Of course, there are investment opportunities available that are aligned with 2021 trends.
With robust web and app interfaces, 1exchange provides companies and investors liquidity, control, and monetisation – all at their fingertips.
What are you waiting for? Start trading with us today!
References
Google, Temasek and Bain 2020, e-Conomy SEA 2020, viewed 10 November 2021, https://www.bain.com/insights/e-conomy-sea-2020/
Sardana, S 2020, The stock market will become disconnected from the economy in 2021 as companies expand layoffs, money manager says, viewed 23 October 2020, https://markets.businessinsider.com/news/stocks/stock-market-outlook-layoffs-us-economy-covid-unemployment-profits-2020-9-1029603528#
The opinions expressed in this publication do not purport to reflect the opinions or views of 1exchange (1X).
