Every investor has their own unique style when it comes to the rigorous decision-making process that goes into what to include in their portfolio and how to weight it. January, with the fresh perspective that comes from a break and a new financial year pending, is often the ideal time to take a look at investment decisions from a new angle.
One of the most useful ways to do that is the big picture look at trends affecting investing on a global scale.
This ‘seeing the wood for the trees’ approach can help with a far longer-term approach.
Here are some of the macro trends experts are saying will most affect investors in 2020 – and far.
Climate change, the hot and bothered elephant in the room in most macrotrends analyses, continues to affect foresights by experts.
In PwC’s ‘Doing Business in Africa’ report, it was forecast that agricultural productivity throughout the continent could be reduced by as much as a third over the next 60 years due to climate change. This will be under even more pressure due to the fact that numerous experts have estimated the world’s biggest population growth for the next 50 years to unequivocally come from Africa. With less agricultural produce and more mouths to feed, what will happen for investors?
This is in direct contrast to the short view, outlined in the 2017/2018 PwC South Africa Agribusiness Insights Survey, which said that agribusiness drives 65 percent of Africa’s employment, with most bigger agribusiness CEOs forecasting a sunny 10 percent revenue growth for coming years.
To invest in agribusiness or not to? That is the question. It depends largely on an investor’s risk profile.
One shorter-term upside for all this climate focus will likely be the continuing expansion and sophistication of ESG funds, perhaps into a formidable asset class in their own right. ESG has traditionally been seen as a ‘tree hugging alternative’ fund in SA, but has already seen a marked renaissance in the past six months.
However, the environmental ‘E’ sure to be emphasised with all this talk of climate change is likely to only further the ESG interest and value for savvy investors who are willing to look.
The rise and rise of pharmaceuticals
Less of a problem for the rest of Africa – but still a concern for SA – is the global ongoing trend in ageing populations getting older.
We are living longer, but often not living healthier. This has already led to an absolute boom in the frail care and pharmaceutical industries and this is showing no signs of slowing down. Shareholders of medical aids, established drug companies and private healthcare institutions like Netcare are still likely to be laughing all the way to the bank in 2025.
In October, tech thought-leader Gartner made an uncommon media appearance by announcing the findings of their 2019 CIO Survey and, as a result, their 2019-2020 technology trends, which they presented to government as the mostly likely to benefit public services in the next year or two and what their CIOs should look at investing in.
It provides valuable insights for the average investor too.
Startups specialising in digital identity protection software and ‘XaaS’ companies (software companies providing a generalist ‘anything as a service’ range of offerings through the cloud, paid for via subscription). The survey found that a significant 39 percent of government organisations say they plan to spend the greatest amount of any new funding on cloud services above anything else – which for investors means that this industry is ready to boom.
All of these pose attractive opportunities for the average investor, but remember that the savvy investor doesn’t only look at trends – they invest in what they know with the solid advice of a financial professional who knows what they’re doing.
Here’s to a good 2020!