Investors looking for the “Next Big Thing” should seek opportunities in 5G, amongst others in fintech, greentech or healthtech, according to the Year Ahead Outlook 2021 from UBS.
According to the report, by 2035 the 5G transition alone should create $13.2trn of economic value.
“5G enables myriad business models and could spur the growth of a new generation of platform leaders capable of harnessing 5G technology,” the report writes.
Alongside 5G, the aforementioned tech-based trends have been accelerated by the COVID-19 pandemic and “will help power a new and renewable future, especially in sectors undergoing technological disruption”.
The report continues: “Whether it’s the transition to a zero carbon economy, the increased need for a more efficient and holistic healthcare system, or the push to further digitize financial services – the companies exposed to these trends are expected to enjoy above average growth over the longer-term.
“If the last decade was about investing in the technology sector itself, we think the next decade will reward investing in the disruptors in sectors undergoing technological transformation.”
Things coming into place
UBS anticipation of growing interest in 5G coincides with Apple’s 2020 launch of its first 5G phone – the iPhone 12.
Elsewhere in the report, global wealth manager warns we face a world that is more indebted, more unequal, more local, but also more digital and sustainable.
However, the general outlook for 2021 was positive, with expectations that economic output and corporate earnings will rebound to pre-pandemic levels in 2021.
Mark Haefele, chief investment officer at UBS Global Wealth Management, says: “We think 2021 will be the ‘year of renewal’. Renewed growth, expansive fiscal and monetary policies, and fresh political leadership mean we should also expect new market leadership in 2021. Looking beyond the year ahead, investors should also consider sectors undergoing technological transformation. If the last decade was about investing in technology itself, we think the next will be about investing in the disruptors challenging the status quo in other industries.”
According to the report, for a base case scenario, a combination of fiscal stimulus, continued low interest rates, and a vaccine rollout should generate above-average returns for small- and mid-sized companies, select financial and energy stocks, and companies in the industrial and consumer discretionary sectors.
Meanwhile, private market and sustainable investments could be valuable additions to investors’ portfolios. Heading into 2021, UBS maintains its preference for sustainable investments for private clients investing globally.