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A futuristic portfolio: Disruptive leaders, adaptive firms are cool bets

About time you sat down with your financial adviser and gave your portfolio a futuristic twist.

, ETMarkets.com|
Updated: Aug 17, 2017, 01.09 PM IST
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New modes of transport, crypto-currencies, new ways of manufacturing and renewable energy are some of the key investment trends emerging the world over.
New modes of transport, crypto-currencies, new ways of manufacturing and renewable energy are some of the key investment trends emerging the world over.
The world is witnessing a paradigm shift in technology with automation, internet of things (IoT) and artificial intelligence and also in areas like personal transport.

About time you sat down with your financial adviser and gave your portfolio a futuristic twist.

Constantly evolving domestic and global economies demand that investors take a pause to identify and evaluate the impact of this tectonic shift on their investments, says Shiv Gupta, Chief Executive Officer, Sanctum Wealth Management.

New modes of transport, crypto-currencies, new ways of manufacturing and renewable energy are some of the key investment trends emerging the world over.

Take solar energy, for instance. It is roughly 1 per cent of energy production currently. By 2027, 57 per cent of India’s total power capacity will come from non-fossil fuel sources. China, India and Germany are leading the charge.

Going by policy targets, 57 per cent of India’s total power generation will be from non-fossil fuel sources by 2027. China has already begun moving away from coal, and $145 billion will be invested to increase its solar capacity by five-fold till 2020.

Spikes in crude oil prices directly contributed to the recessions in 1973-74, 1979-80, 1990-91, 2000-01, 2007-08 and 2010. In an era of declining crude prices and supply glut, a possible outcome could be an elongation of the business cycle being seen currently.

Markets may soon see a dramatic shift in modes of transportation, benefitting mostly battery and software companies. Electric cars accounted for 0.8 per cent of new car sales globally in 2016, and that number is rising steadily. Japan now has more battery charging stations than petrol pumps.

Automation will be a good investment theme, says Ambareesh Baliga, independent market analyst. “But I am not sure which related stocks are available. Another theme should be shift to electric cars, though it may take 3-4 years, but post that, the shift could be swift. In another 7-8 years lots of thing will change,” he told ETMarkets.com.

Use of drones is projected to increase in the years ahead. They will be used for consumer and commercial applications, such as delivering goods and medical supplies to remote areas, inspecting critical infrastructure such as bridges and power lines, surveying areas struck by natural disasters and fighting animal poaching.

Flying cars will use the same advanced technology used in drones to transport people. This will benefit materials, batteries and software industries.

The NDA government wants to transform India into a 100 per cent electric vehicle nation by 2030.

Internet of things (IoT) is emerging as the next important thing. “Rs 500 smartphones will place massive load on networks. Data usage is likely to explode. By 2020, 80 per cent of adult on earth will have an internet-connected smartphone. Forward thinking telecom disruptors look well poised in this space,” said the Sanctum Wealth report.

IoT is emerging as a third wave in the development of cyberspace and is expected to bring a revolution in the way objects around us communicate, gather and distribute information.

This would improve efficiency, as an ecosystem of connected physical objects would observe, identify and understand a situation and react without being dependent on human assistance.

Some of the companies from India’s listed universe are already taking baby-steps to try and capture this future growth.

Among them, companies like Reliance Industries, Bajaj Finance, Maruti Suzuki, Tata Elxsi, Astral Poly, Minda Industries and Eicher Motors have it in their DNA to be on the forefront of business disruption.

The next set of companies to look at will be the ones with adaptive managements, businesses that are transforming quickly to tap emerging opportunities. Motherson Sumi, Piramal Enerprises and Kotak Mahindra Bank are companies being counted in this segment.

Some estimates show robots and artificial intelligence (AI) would replace some 38 per cent of jobs in the US by early 2030s. While automation replaced agriculture and manufacturing jobs in the earlier industrial revolutions, the Fourth Revolution will see advanced sensors and machine learning algorithms adding intelligence to automation to replace much of human brain work.

Smartphones, intelligence and automation will be at the core of this Fourth Industrial Revolution.

Robo-advisers are seen as the next big disruptor in the financial sector, which will help institutions cut labour cost.

“But history shows while modern technology does eliminate jobs, it creates new and better jobs,” said the Sanctum Wealth note.

Crypto-currencies Bitcoin and Ether are already hogging limelight generating unbelievable returns over the past few years. Bitcoin has given 24,435 per cent return since January 2013, surging from around $13.96 in January 2013 to $3425 as of August 7, 2017.

Some companies have already started spending on automation.

“We want to focus on creating focussed products for the niche segments. We have invested a lot in automation over the past four years. Now we are starting to see real scaleup in some of these segments,” Rashesh Shah, Chairman and CEO, Edelweiss Financial Services, told ETNow recently.
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