One of the world's largest wealth managers shared his investment ideas
Investors should look elsewhere for the next gold mine after a decade of tech dominance, UBS Wealth Management chief investment officer Mark Hafele said Wednesday..
According to the bank, since 1973, sectors that have dominated the market for a full decade had only an 8% chance of repeating those numbers over the next decade. Such sectors also had a 25% chance of becoming one of the two worst groups over the next 10 years. If this trend continues this year, it may be time for investors to ditch tech and consumer stocks and look for a new market leader, said Mark Hefele (Mark Haefele).
«If the past decade has been about investing in the tech sector, we think the next decade will bring rewards for investing in disruptive sectors undergoing technological transformation.», – he added.
Here are four subsectors that Hefele has identified as possible market leaders in the next decade:
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Distribution of 5G networks
The launch of the first 5G iPhones heralded a new phase in innovative communications technology. More people will have access to 5G than ever before, Hafele said, and businesses can leverage faster connections to transform over the next decade..
First to benefit from 5G, UBS says companies that build and install towers with appropriate technologies. They could see a 1,900% jump in 5G capital spending over the next five years. Smartphone makers will also thrive.
Once 5G becomes the new standard, Hafele said, companies that can create new use cases for the technology will present attractive investment opportunities..
He added that autonomous driving, augmented and virtual reality, telesurgery and artificial intelligence technologies are just a few of the industries that are likely to expand in a 5G-enabled economy..
Change payment methods
The coronavirus pandemic has accelerated the transition to online payments and e-commerce, but the bank believes the growth is likely to continue after the virus is contained. UBS expects fintech companies to see revenue growth by 2030 thanks to «middle-aged adolescents» and will become one of the fastest growing industries in the world.
«Once consumers get used to using digital payments in the first place, many will not return to traditional means.», – said Hafele, adding that the growth of digital payments over the next decade will spread to level «early adolescence».
In the medium term, fintech companies will expand their range of services, including online lending, investment and insurance technology, according to UBS. These businesses offer higher margins and higher growth. The introduction of blockchain technology and artificial intelligence can greatly simplify the scaling of such services..
Optimization of healthcare
Once the healthcare industry recovers from the pandemic, technology will play a critical role in increasing efficiency, reducing costs and improving quality, UBS said. The US has already spent nearly $ 8 trillion on healthcare, but up to 25% of last year's spending was wasted on poor coordination, pricing, shipping, and overly complex treatment..
«We see significant growth potential if new technologies help service providers create more efficient and holistic healthcare systems», – said Hafele.
According to the bank, telemedicine, new treatment technologies and expanded diagnostic capabilities are three pillars that will grow significantly over the next decade. Gene editing, genetic therapy and regenerative medicine can improve patient outcomes, while artificial intelligence and new sensory technologies will enable faster and more accurate diagnoses..
UBS expects the US telemedicine market to grow to over $ 30 billion by 2025, from less than $ 20 billion today. The company added that the Chinese market will grow fivefold to exceed $ 50 billion..
Go to «green» technologies
Governments are taking more serious steps to reduce carbon emissions. The EU and Japan plan to achieve carbon neutrality by 2050, and China intends to do the same in 10 years. These goals will contribute to the development «green technologies», as the world's largest industries seek to benefit from public investment and subsidies, Hafele said.
Countries will push for a gradual transition to green technologies, replacing fossil-fueled electricity generation with renewable energy, replacing traditional cars with electric counterparts, using hydrogen instead of gas in industrial production, and finding digital solutions to improve efficiency, according to UBS, according to UBS. Accordingly, the renewable energy, hydrogen and battery industries will be the most successful.