Global Investments that Matters in 2021

For decades whenever the question of investment crosses our minds we look up to world’s leading investment management companies, co-operative banks, insurance companies, corporations, private equity players and asset management companies. Although none of them warrants either expressly or impliedly any kind of fixed or guaranteed rate of returns or investors wealth management, it may seem like a safe investment. However much the conventional way of investment may look lurring it is crucial to read the trends of the market to get the best out of your investments.

Following market trends and investing at the right time can be a tedious task. To ease your research process, we have jotted down a few global investment trends that are developing an air around it in 2021. Let’s take a look –

• Booming Decade for Commodity Prices

In the present times, where the world is sneaking its way out of the pandemic, we are witnessing a sudden surge in the prices of commodities like oil, copper and agricultural products globally and investment in them may give huge returns to the investors in the coming years. Since November 2020, when the world’s largest economies have started their vaccination drives, the rise in the price of energy, metals and crops are highlighting the potency of various countries. 75% rise in the oil prices have proved to be a flood of cash for many Saudi Arabia and Russian exporters.

Chile, the world’s biggest copper producer, has seen a surge in its stock market majorly due to the rising demand of the red metal. Copper with its multiple usage is trading above $10,700 in the month of May for the first time in about a decade. As per Citigroup Inc. copper will touch $12,000 in the upcoming months with the increased demand of electric cars and other renewables.

As per the Bloomberg Commodity Spot Index, commodity and energy markets have shown 40% rise in the prices since late 2020.

• Renewed Demand for Housing

For decades, real estate has been a very promising sector in terms of investment, but with the worldwide pandemic last one year has been very challenging for this industry. As per the Knight Frank Global House Price Index, almost 12 countries including US, UK, Canada, and New Zealand, etc have recorded double-digit growth in the prices in the first quarter of 2021. Even New Zealand, a country that has managed to keep the pandemic under control to a large extent, has witnessed a housing market soar by 22%. The United States is experiencing a rise in the cost of lumber and other materials along with surging house prices.

To revive the economy, many world central banks like the Federal Reserve and European Central Bank have cut their interest rates and recorded lowest mortgage rates to reduce the cost of borrowing. Reserve Bank of India’s move to maintain the status quo of interest rates is an attempt to reach the pre-covid normalcy threshold as per Shishir Baijal, CMD of Knight Frank India.

However, now with more people working from home, the demand for a collaborative and accommodative house has seen a surge in the last few months, so investment in a house could be a wise option for long term investors.

• Surging Economies and Recovery of the Industries

Amid various fiscal and monetary support measures by the governments all the economies are on their path to recovery. According to the World Economic Situation and Prospects mid 2021 report, the global economy is expected to rise by 5.4% in 2021 as compared to the contraction of 3.6% in 2020. Although recovery for manufacturing dependent economies can be predicted with certain assurance, recovery of tourism and hospitality dependent economies still looks unlikely to happen even after being stagnant for a whole year.

This uneven recovery will result more in the manufacturing sector than in the service sector, unlikely leading to any meaningful recovery. While the big companies can easily pave their way out of losses of the pandemic it will be a risky affair for MSMEs.

• Vaccination Drive

There is no debate on the fact that how immensely the global economy has been damaged due to the pandemic. The global GDP has fallen by 4.2% and the only way of rebound is the rollout of vaccination drives. The last resort to uplift the employment and to revive the economy is large scale distribution of the vaccines. As compared to the world, Asian countries have shown recovery at a faster pace – particularly China, which had experienced only a moderate dip in 2020 and is expected to see 8.2% of growth in GDP in 2021.

As per the Organisation for Economic Development, global GDP should increase by 4.5% by the end of 2021. It further observes that countries with effective track and trace systems with rapid development of vaccines outperform other countries. Investing in the stocks of the companies that are associated in the production of the vaccines might give good returns to the investors.

• Boosted Pharmaceutical Stocks

Being a prime driver in the fight against Covid-19, the pharmaceutical industry has witnessed an enormous rise in their sales after getting approval from US and other foreign governments for vaccines. In Spite of being at a high risk, these companies are attracting long term investors with their profitable opportunities. In 2020, FDA have approved 53 pharmaceutical products assuring treatment for Covid-19. According to Statista, in late 2020, the global pharmaceutical market was worth $1.27 trillion.

Depending on the portfolio, investors can choose their pharma stocks that could give them a potential return in the coming future.

• Winners from the Last Year

Considering the winners from the last year it shall be no doubt, all the technological driven companies especially Edtech. The prodigious growth of the Edtech market has accelerated rapidly during the global pandemic with an increased adoption of online education. Extending from its primary role of supporting conventional education, now EdTech models are focusing more on indoctrination of educators and upliftment of learning programmes. According to a report of a market research company in San Francisco, global education technology is expected to grow at a compound annual growth rate (CAGR) of 18.1% from 2020 to 2027. If the growth rate is so promising what are the key technologies that are enabling the growth of this sector?

As we know the EdTech sector is an awfully technology driven sector, investment in them will thrive rewarding profits in future. Investments in technologies like Augmented Reality/Virtual Reality, Artificial Intelligence, Robotics and Blockchain would witness a surge to the tune of $12.6 billion dollars from the current $1.8 billion dollars in nearly 5 years as per HolonIQ’s smart estimates report.

Promising to create an education system that delivers quality education along with wealth management, this particular sector is witnessing an unprecedented growth in the upcoming future.

The top 4 Ed-Tech companies that have attracted highest funding in 2020 are:-

• Future Outlook of Cryptocurrency

Few years back no one in their wild dreams had ever imagined that there would be an alternative form of currencies that could topple our conventional ones. Many countries are facing economic, social and environmental pressures to find an alternative to their conventional currencies.

Cryptocurrency is the best route that investors take when it comes to investing in alternative forms of currencies. Gradually cryptocurrencies are becoming part of the mainstream financial system that may determine the fortunes of alternative investments for individual investors as well as investment management companies.

Being the most popular and major form of crypto currency, Bitcoin is a crowd puller. It’s market worth is $710 Bn as of May 2021. Operating with its own blockchain this digital form of money is a widely used digital currency on the planet.

Conclusion

Tracking investment trends is one of the most crucial parts of making a sound investment portfolio. The market trend has always been volatile but investing in fundamentally strong verticals can make your portfolio take the hit even in the most uncertain times.

About Xanara

Xanara is a private banking and wealth advisory focused on developing and implementing transparent and client-centric, financial solutions that are backed by expertise. We understand the weight of our solutions and act with the utmost care, resilience, and most importantly, integrity.