Fintech, healthcare and luxury goods sectors are poised for strong growth EJINSIGHT
If we look at the current geopolitical situation, it is difficult for any company to be truly global because of the different sectors in different markets. Under the existing regulatory environment, there is a greater degree of uncertainty than there was five years ago, making it more difficult for us to identify where the opportunities and growth will come from. We believe that there are some great growth opportunities in all environments, and for a company to become one that grows more than the market and the economy, it must do something different and special, and it is in these areas that we find strong secular growth.
Fintech
Fintech is an area where we see growth. More mature markets such as Hong Kong, the UK and the US have an abundance of fintech companies that have been ‘the next big thing’ for a long time, but they usually don’t break out.
What makes fintech successful is the nature of the competition in the target market. The large, well-established established banks in many EMs have often not invested as much as they should in their websites and mobile apps. In the emerging markets, when we find banks that have underinvested in such technology, making their websites and apps relatively expensive to operate and inconvenient to use, we know that there is a potentially lucrative opportunity for fintech challengers. So there is a large potential profit pool that the new, cheaper, more efficient, more convenient and faster company can exploit.
Health Service
Exciting opportunities also exist in the health sector, but not with the large ordinary pharmaceutical companies because many of these are not growing particularly quickly. Instead, there are new areas in science and technology that open up new forms of treatment and new growth cycles.
The key is to find undervalued growth areas. Take diabetes as an example – there are various treatments that have been around for a long time. However, obesity is an accompanying global growing problem. Some of these diabetes treatment companies have, in the course of their research, discovered new ways to tackle obesity at the same time, which is much less well understood and appreciated by the market. We believe that the opportunities in this field will be greater in scope and duration than investors realise.
Luxury goods
Some investors were negative about the luxury goods sector due to the pandemic-induced disruption to international travel in recent years. Despite that, however, luxury goods companies have continued to show solid growth.
Fundamentally, for a luxury goods company that has a strong brand rich in heritage, cachet and exclusivity, the key to managing that brand over the years is to control supply, ensuring that it remains less than demand. Even now, with international travel increasing again, instead of flooding the market with their products, each market should be left wanting a little more. We also often find that the marginal buyers of luxury goods are younger consumers in their late twenties to early thirties who have started to earn good money for the first time and buy it as an aspirational product. There is also an element from the next generation – environmentally conscious consumers who want to have fewer possessions, but of higher quality. So, in terms of that segment of the economy, we still see strong long-term structural growth.
— Contact us at [email protected]
