2024 promises to be dynamic for investments, with huge opportunities for growth marked by significant shifts in various industries and markets.
It’s crucial that investors stay informed about the latest trends that could shape their investment strategies.
We have compiled a list of high-profile sectors that are set to yield even more potential for investors:
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ExploreGreen energy
The global push for sustainability has gained remarkable momentum, and green energy investments are expected to rise as governments, corporations, and consumers increasingly prioritise environmental responsibility. Renewable energy, clean technology, and companies committed to reducing their carbon footprint are all likely candidates for growth within this trend.
Value and growth predictions:
The global green technology and sustainability market is forecast to grow rapidly over the next decade. Last year, the size of this market amounted to roughly 13.76 billion U.S. dollars. By 2030, it is expected to peak at almost 62 billion U.S. dollars, increasing at a compound annual growth rate of 20.8% from 2023 to 2030. (Source: Statista.com)
Pros of investing in green energy:
- Investment opportunities can yield competitive returns; long term viability; portfolio diversification to spread risk.
- Innovation in technology and energy efficiency lead to cost reductions, making green energy more competitive.
- Many governments offer incentives, tax breaks and favourable policies to encourage green energy investments.
- Companies that invest in green energy often benefit from an enhanced brand reputation due to their commitment to environmental responsibility.
Cons of investing in green energy:
- Green energy technologies often require significant upfront investments. Solar panels, wind turbines, and other renewable energy infrastructure can be expensive to install, which can deter some investors.
- Large-scale renewable energy projects, such as wind farms and solar installations, can have land use and environmental impacts which can lead to opposition from local communities and environmentalists, this can affect profit margins.
- Technology is evolving quickly in the green energy sector, creating risks for investors who may see their investments become outdated or less competitive due to technological advancements.
- As the green energy sector grows, competition among companies and investors increases, which can reduce returns on investment.
Green energy companies to watch:
Tesla (pioneer in electric vehicles and renewable energy solutions); NextEra Energy (one of the largest renewable energy companies in the world); Prologis (global leader in logistics real estate, focusing on sustainable design); First Solar (leading manufacturer of photovoltaic solar panels and solar energy technologies); Xylem (global water technology solutions).
As the demand for environmentally and socially responsible business practices grows, these types of investments are likely to play an increasingly important role in portfolios seeking both financial returns and a positive impact.
Digital transformation
Technologies such as artificial intelligence, blockchain, and the Internet of Things (IoT) are driving disruption across most sectors. Companies that leverage these technologies to enhance efficiency, streamline processes, and create innovative solutions are likely to attract investor attention. Digital transformation will continue to shape investment strategies in 2024.
Value and growth predictions:
The global digital transformation market size was estimated at USD 752.17 billion in 2022 and it is expected to reach over USD 7,033.01 billion by 2032, growing at a notable CAGR of 25.1% from 2023 to 2032. (Source: uipath.com)
Pros of investing in digital technologies:
- Digital technologies increase operational efficiency, leading to cost savings and improved productivity, boosting returns for investors.
- Investment in digital technologies fosters innovation. New technologies can lead to the development of novel products, services, and business models.
- Data Insights can drive business growth and increase profits. Advanced analytics and predictive tools make data-driven decisions, forecast trends, and optimise operations.
- The internet and digital technologies break down geographical barriers, allowing businesses to reach a global audience and gain a more profitable edge.
- Some digital technologies, such as cloud computing and virtualization, can contribute to environmental sustainability which attractive to investors.
Cons of investing in digital technologies:
- Implementing digital technologies often requires a significant upfront investment in hardware, software, and training. Beyond the initial investment, there are ongoing costs such as software licenses, maintenance, updates, and cybersecurity measures that must be budgeted for.
- Some digital technologies can be complex to implement and maintain, requiring specialised knowledge and expertise. This complexity can lead to higher costs and potential complications.
- As businesses rely more on digital technologies, they become more susceptible to cyberattacks and data breaches. Protecting digital assets and customer data is an ongoing and costly challenge, which can affect profitability.
- Digital technologies evolve rapidly. Investments made today might become outdated quickly, requiring additional investments in upgrades or replacements.
Despite these challenges, many businesses find that the benefits of investing in digital technologies outweigh the drawbacks. Investors should develop a comprehensive strategy for digital technology adoption to mitigate these potential drawbacks.
Companies to watch:
Alphabet (Google’s parent company, leader in AI and machine learning technologies); CrowdStrike (cybersecurity sector; Okta (identity and access management solutions); Teladoc (remote healthcare).
As technology continues to evolve, investors should consider companies that are at the forefront of these transformations and are poised to shape the future of various sectors.
Healthcare
Global healthcare and biotechnology sectors were brought sharply into the spotlight post-Covid and they are expected to remain focal points for investors in 2024. Breakthroughs in personalised medicine, genomics, and telehealth are transforming the way healthcare is delivered.
Value and growth predictions:
The global biotechnology market was estimated at USD 1,224.31 billion in 2022 and is expected to be worth around USD 3,210.71 billion by 2030. It is poised to grow at a CAGR of 12.8% from 2023 to 2030. North America accounted for 37.76% revenue share in 2022. (Source: precedenceresearch.com)
Pros of investing in healthcare and biotechnology:
- Potential for long-term growth due to an aging population, increasing healthcare needs, and ongoing medical advancements.
- Healthcare research leads to new treatments, therapies, and technologies that can provide substantial returns for investors.
- Investments in this sector should stay relatively stable as people will always need healthcare, regardless of economic conditions.
- COVID-19 highlighted the importance of global health security. Investments in pandemic preparedness, vaccine development, and infectious disease treatments may continue to grow.
- Supporting industries that promote human health care and wellbeing is appealing to investors.
Cons of investing in healthcare and biotechnology:
- It is a highly competitive market with established pharmaceutical companies and new start-ups vying for market share.
- There are regulatory risks, such as rejections or delays in the approval process, which can significantly impact a company’s financial performance.
- The success of many biotech companies is contingent on the outcomes of clinical trials and failures lead to significant stock price declines.
- When patents expire, generic competitors can enter the market, often leading to a significant drop in revenue.
Companies to watch:
Moderna Inc. (biopharmaceutical); Illumina (personalised medicine); Edwards Lifesciences (medical devices); Teladoc Health (digital health platforms); Gilead Sciences (pharmaceutical innovations).
Healthcare and biotechnology markets can be unpredictable, and individual company performance can vary widely. Investors should consider their risk tolerance and investment goals carefully.
Global infrastructure
Governments around the world recognise the need to upgrade and expand critical infrastructure, including transportation, energy, and communication networks. This trend offers opportunities for investors interested in long-term, stable returns in 2024.
Value and growth predictions:
The value of global construction is expected to rise from US$9.7 trillion in 2022 to US$13.9 trillion in 2037, driven by superpower construction markets in China, the U.S. and India. The growth will also be driven by huge opportunities in the global green economy. The UK is set to be fastest growing for construction work done in Western Europe. (Source: https://www.oxfordeconomics.com/)
Pros of investing in global infrastructure development:
- Infrastructure assets, such as toll roads, airports, utilities, and pipelines, often generate steady and predictable cash flows.
- Many infrastructure investments have the potential to provide protection against inflation because the revenues generated from infrastructure assets often increase with inflation.
- Infrastructure assets tend to have long lifespans and can appreciate in value over time.
- Investing in global infrastructure allows investors to access opportunities in different countries, providing diversification.
- Infrastructure assets often exhibit lower price volatility compared to other investments, making them suitable for risk-averse investors.
- Many modern infrastructure projects incorporate sustainable and environmentally responsible practices which attract socially responsible investors.
Cons of investing in global infrastructure development:
- Infrastructure projects are often subject to regulatory changes and political instability in different geographical regions which can adversely affect productivity and profitability.
- Infrastructure investments typically have long payback periods, sometimes stretching over decades. This can limit liquidity and tie up capital for an extended period.
- Some infrastructure projects can face opposition from environmental groups and local communities. Delays or legal challenges can increase costs and hit profit margins.
- Infrastructure investments often lack liquidity, especially when compared to more traditional assets like stocks or bonds. Selling an infrastructure asset can be time-consuming and challenging.
Companies to watch:
Brookfield Renewable Partners (renewable energy infrastructure); Global Ports Holding (logistics infrastructure); American Tower (communication and technology infrastructure); Veolia Environment (water and utility infrastructure).
Global infrastructure development plays a vital role in supporting economic growth and societal needs with potentially rewarding ventures for investors.
Financial services
The financial sector has seen significant transformations, largely driven by fintech innovations and evolving consumer preferences. In 2024, decentralised finance (DeFi) platforms, blockchain-based financial services, and digital payment solutions are poised to reshape traditional banking and investing models.
Value and growth predictions:
The financial services market reached a value of nearly $23,328.73 billion in 2021, having grown at a compound annual growth rate (CAGR) of 3.5% since 2016. The market is expected to grow from $23,328.73 billion in 2021 to $33,313.50 billion in 2026 at a rate of 7.4%. The market is then expected to grow at a CAGR of 6.3% from 2026 and reach $45,149.00 billion in 2031. (Source: globenewswire.com)
Pros of investing in financial services:
- Financial services encompass a wide range of products, including stocks, bonds and mutual funds, which allows investors to diversify their investment portfolio, which can help spread risk and potentially increase returns.
- Many financial services, such as dividend-paying stocks, bonds, and certain mutual funds, can provide a steady stream of income through interest or dividend payments. This will provide investors with a regular cash flow.
- Financial markets are generally highly liquid, meaning investors can easily buy or sell financial instruments like stocks and bonds.
- Some financial services offer tax advantages, such as tax-deferred growth in retirement accounts like 401(k)s and IRAs.
- Financial services often provide access to international markets, allowing you to diversify your investments globally and benefit from growth around the world.
- Online trading platforms and mobile apps have made it easier than ever to invest in financial services. Investors can monitor and manage their investments online.
Cons of investing in financial services:
- Investments in financial services are not guaranteed and can result in the loss of capital. The value of stocks, bonds, mutual funds, and other financial instruments can fluctuate, and investors may not recoup their initial investment.
- Many financial services charge fees to investors, such as include management fees for mutual funds, trading commissions, and administrative costs for some retirement accounts.
- The financial services industry is heavily regulated, and changes in regulations can impact the profitability and stability of financial institutions. Regulatory changes can also affect the terms and conditions of certain financial products.
- Financial markets can be highly volatile, with prices subject to rapid and unpredictable changes. This volatility can be especially challenging for short-term investors or those with a low risk tolerance.
Companies to watch:
PayPal Holdings and Square Inc (fintech); Revolut (digital banking); Coinbase Global (cryptocurrency); Root Inc (insurtech); Wealthfront (robo-advisor).
As 2024 approaches, the investment potential is rife with new opportunities. However, thorough research, diversification and a clear understanding of risk are essential when considering investment options. By staying informed, investors can give themselves the best chance for success in a rapidly changing world.
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