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Five industries to watch for future investments

Five industries to watch for future investments

Are these industries on the cusp of a boom?

It is impossible to predict what 2019 might bring for the business world. However, there are certain sectors that are worth keeping a close eye on. As the fast-paced developed world has embraced science and technology, many of the industries associated with it are worth taking note of – not just for their current worth, but also more for their future potential.

Renewable Energy – solar, wind and biofuels

Environmentalism has become a key topic, with a particularly recent spike in interest following the Paris Agreement aimed at strengthening the global response to climate change. Increased global concern for environmentalism leads some to call fossil fuel investments the ‘tobacco [investment] of the 21st-Century’.

Many hypothesize a ‘carbon bubble’ brewing in the global economy, where a bubble will form around fossil fuel investments as the world inevitably moves towards renewable energy.

A predicted amount of trillions of dollars in fossil fuel investments will be left in stranded assets, some say. Alternatively, projections from the International Energy Agency suggest 40 per cent of the world’s energy will be renewable by 2040, with bioenergy accounting for 30 per cent of growth between 2018-2023. According to a UN report published in 2017, locally, the UAE has seen a staggering 29-fold increase in renewable energy investment bringing the figure to $2.2bn.

As far as technology in renewable energy has come, it has still got a long way to go. That means that investing now will lead to long-term returns. The energy market has historically evolved from coal to its current use in fossil fuel. Therefore, trends suggest the world is at the precipice of its next evolution towards renewable energy.

 

Artificial intelligence

As the technological revolution comes into full swing, the contribution of artificial intelligence is predicted to only increase. Research firm Gartner released predictions that in 2022 AI’s derived business value could be as high as $3.9 trillion, while 91 per cent of enterprises expect AI to deliver new business growth by 2023.

AI falls into the ‘fourth industrial revolution’ which followed on from the 1950s-70s Digital Revolution, making it an important technology industry to follow. Some real-life applications for AI are expected to be in finance, where it will better customer service by using chat-bots, and health, where it hopes to use AI to ensure early diagnosis in patients.

According to one local report, AI is set to boost the UAE economy by $182bn by 2035. Furthermore, it is not just predicted to save money, but also time. PwC stated that labour productivity could be increased by up to 40 per cent, while Deloitte has released a report saying freer labour hours could bring better policy decisions for US policymakers. As businesses see the global potential of AI, consumers must see that potential as well.

 

FinTech and e-commerce

Other technological advancement, are in financial technology (FinTech) and e-commerce. Though there are differences, FinTech and e-commerce find commonalities through their use of technology as a means for buying and selling. Its growth in recent years has been unparalleled; perhaps significantly due to the notoriety of Bitcoin, however also in platforms such as Apple Pay, PayPal and Google Wallet that make use of FinTech.

Official data shows a steady growth in the total revenue of global mobile payments from 2015-2019, including a $310bn growth from 2016-2018, and a predicted $150bn growth in 2019. Similarly, a steady growth is seen in the internet commerce index, as Dow Jones showed a 39 per cent increase in e-commerce investment from 2015 to 2018.

Recent trends in consumer spending trends show that despite economic slumps, consumer spending has not declined, suggesting that internet tools that enable the ease of shopping will show simultaneous growth. Despite regular market fluctuations, it seems clear that technology is an investment for the future.

 

Cybersecurity

As the internet increases its predominance in administrative processes, one industry that grows alongside it is cybersecurity. It has seen particular growth in recent years following several data breach scandals, for instance in 2018 alone Quora suffered a data breach that exposed the personal data of up to 100 million users, and Marriott International suffered a breach that affected up to 500 million guest’s name, address, and passport numbers.

Official data showed that the global cost of cyber-related crimes has increased by 62 per cent between 2013-2017. Consequently, as cyber-crime increases so does the necessity for cybersecurity meaning it’s predicted to grow at a higher rate than, for example, IT’s predicted market growth.

Statista predicted that between 2017 and 2023, the cybersecurity market will see a 55 per cent growth from a market size of $137.63bn (2017) to $248.26bn (2023).

 

Healthcare – pharmaceutical companies and health care providers

Due to the sheer number of consumers in the healthcare industry, investing in health is often seen as a clever choice. Some suggest that it is an even better investment now given the millennial generation’s tendency to make health-conscious ‘preventative’ health decisions rather than ‘curative’ decisions.

Due to technological advances, the healthcare industry is expected to be extremely dynamic in the coming years as it integrates AI, machine learning and value-based care. This means the industry will not become stagnant, but will rather keep up with the fast-paced world it’s in.

For instance, worldwide med-tech sales are forecasted to grow at an annual compound growth rate of 5.1 per cent, reaching US$521.9bn by 2022, according to Deloitte.

Based off S&P Healthcare indexes, the global health trends have been fairly stable and high performing. Schroders Global Investment Study 2018 found that 66 per cent of investors were interested in investing in a thematic fund that focused on healthcare. The staggering amount of money annually seen in the healthcare industry has seen a steady increase since the early 2000s.

Between 2013-2016, the worldwide revenue of the pharmaceutical market saw a $112.1bn growth, while data also forecasted a growth of 160 per cent in the pharmaceutical sector from 2017-2030.

Given the necessity of the healthcare industry as well as the constant growth and development of healthcare through its R&D, this industry is definitely one to watch out for in the coming years.

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