From the beginning of 2020 and until the end of February, the sectors that stood out and very likely to continue to stand out in the coming months are the technology and communication industry. In particular, the technology industry was greatly favoured after the signing of the US-China trade agreement, removing some of the uncertainty that has perpetuated the trading world and since China is the main market and source of revenue for many technology companies in the US, Japan and the EU respectively.
by Thanos S. Chonthrogiannis
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Given this fact and the fact that US companies have managed to show improved profitability figures, while technological development continues unscathed, they have raised expectations for even greater profitability in technology companies than the now anticipated implementation of specific projects and services such as cloud business, internet activity expansion, 5G technology application, increasing expansion and implementation of artificial intelligence in more sectors of the economy and social life.
The fact that both employment indicators and corresponding US income and wage earnings growth ratios are at a very satisfactory level has helped the technology sector to distinguish itself from the other sectors of the economy, as investment destination.
The energy sector (oil, natural gas, etc.) and respectively the mining, processing and marketing of mineral wealth (such as copper, aluminum, tin and rare earths, etc.) and due to falling prices from geopolitical upheavals in the Middle East (e.g. oil) and the US-China trade agreement (e.g. rare earths) could be the next branch of the economy to approach the interest of investors everywhere on the planet. Investments in mineral wealth-based commodities will act as a hedge action in investment portfolios. That is why we expect these sectors to approach investor interest.
The next industry that, under certain circumstances, could attract the interest of investors is the shipping-maritime industry. This industry, at this time and for the coming months and due to the epidemic of n-corn-V in China which has caused the recall of many cargo routes, having so far accepted the drastic reduction in fare prices which have in turn caused a decrease in the valuations of maritime-shipping companies, create the conditions for the purchase of the shares of shipping companies so that, over the course of the n-corn-V epidemic, the conditions will be created capital gains in the future for investors.
The shipping companies that will become an investment destination are all those who will manage, during the period, which will last the n-corn-V epidemic, to maintain their capital adequacy unscathed, so that at the end of the epidemic, and having restored the balance in global trade, the leading players in the stock markets will emerge due to the strong price recovery they will experience.
From the beginning of 2020 and until today the new year has begun to shape the scene that will prevail at least until the end of Q2 with a high chance of this scene prevailing and the Q3 of 2020. Geopolitical upheavals in the Middle East, global epidemic, polarised election showdown in the US, difficult and hard Brexit create a backdrop that will create restrictions on global growth (see analysis entitled “Trust Economics Forecasts for 2020”) resulting in investor scepticism as to the well-chosen investment destinations for 2020.
Trust Economics believes that the investors who will be rewarded will be the ones involved in an active management of their portfolios by targeting and selecting for investment of their funds specific companies in specific sectors, and not the investors and portfolio managers who will choose a defensive and passive management and investment respectively in more generally selected sectoral market indices.
