Markets have largely been driven recently by developments around US-China trade and the Federal Reserve. But beyond positioning for shorter-term market moves, we think investors should think about longer-term strategies linked to trends such as demographics and technological advances.
- Enabling technologies: We think enabling technologies – artificial intelligence, augmented reality, virtual reality, big data, cloud computing and 5G – will facilitate tech disruption and grow in aggregate by an average 12.8% annually, from USD 420bn in 2017 to USD 1.1tn in 2025.
- Obesity: Urbanization and rising per capita GDP in emerging markets will contribute to increased obesity worldwide. It is no longer just a wealthy-country problem. If current trends continue, the combined prevalence of obese and overweight people could exceed 40% of the global population by 2030.
- Fintech: Driven by rapid urbanization, strong demand from millennials, and favorable regulation, global fintech is at an inflection point. We expect industry revenues to grow to USD265bn in 2025, from USD 120bn in 2017.
- Emerging market infrastructure: Poor urban infrastructure acts as a bottleneck to growth in emerging economies, making infrastructure investment a priority in many countries. We forecast infrastructure investment in emerging markets to account for two-thirds of the global total by 2025, up from about half today.
- Space: The sharp decline of launch costs is lowering entry barriers to space. We forecast the space economy to grow from USD 340bn to almost USD 1tn in the next couple of decades. Key catalysts are reusable rocket technology and the deep pockets of, and sustained capital investment by, billionaires.
Investors willing to invest over multiple business cycles can benefit from potential mispricing created by the typically shorter-term focus of stock markets.
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