GLOBAL INVESTMENT TRENDS in Forbes Africa August 2015 addition written by Africa Regional Manager and Senior Partner Mr. Wade Dawson. Dawson discusses his view on the current investment landscape.
The first half of the year was defined by alarming headlines and market volatility. I expect the second half of 2015 to be characterized by much of the same. The strong dollar will continue to weigh heavily on U.S. multinationals and will help profits of European exporters. U.S. small cap stocks will outperform. Healthcare and biotech have been beating market indices for years and this dominance will continue. The banking sector will benefit from rising interest rates. Companies that tap into technology and invest wisely into innovative trends will continue to pay big rewards for their investors. By investing offshore you can gain exposure into companies at
the forefront of these international megatrends. You should also be able to achieve superior returns by investing into differentiated investment sectors.
I wrote about how to profit from the Internet of things (IoT) in my last column in May. Since then, we have seen the wearable tech market flourish with the release of the Apple watch and Fitbit’s successful IPO. Last month the biggest tech acquisition in history took place. Avago bought Broadcom for US$37 billion. Both chipmakers help fuel global connectivity, but some analysts are calling this enormous acquisition a clear sign of a tech bubble. Corrections will occur, but tech valuations are not overly expensive.
Internet of Cars (IoC)
The IoT revolution shifts into second gear as cars are becoming smarter, safer, and more “connected.” The Internet of Cars (IoC) is the transformation of a dumb vehicle to a “smart” device. Automated driving systems and connected vehicles will change the way we travel. Most large automotive firms and plenty of tech companies are working on rolling out various versions of driverless cars. Itay Michaeli, an automotive analyst with Citibank says, “this is arguably the most powerful automotive megatrend in history.” Google (NASDAQ:GOOG) has been test-driving self-driving cars since 2011. Google is a great diversified tech play, but most of their revenue will not be coming from their autonomous vehicles. Baidu (NASDAQ: BIDU) the largest search engine in China, has partnered with BMW and will release a self-driving vehicle soon. Automotive supplier Delphi (NYSE: DLPH) successfully completed the longest automated trip covering over 3,500 miles. Uber’s CEO has been vocal about many things controversial, including wanting to cut labor costs. Uber cars in the coming decades will most likely be robo-ubers. The Road Ahead Elon Musk is confident that Tesla Motors will be the leader in electric cars and autonomous vehicles. Musk expects to have his first version of “auto pilot” out this month, which assists drivers with steering. Buying Tesla (NASDAQ: TSLA) is a smart renewable converging tech play. TSLA is up 19.9% year to date and up 29.2% the last three months.
Smart Car Plays
The best way to profit from this multi-billion dollar self-driving trend is to buy Mobileye (NYSE:MBLY). Their software already allows hands-free highway driving. The Israel company, which had its IPO in 2014, is a leading developer of camera-based advanced driver assistance systems (ADAS), and its vision technology is already used by 22 of the world’s top 25 automakers. Mobileye has a $13.2 billion market cap, and beat market expectations last quarter. The stock is up 43.9% year to date, and 32% up over the last three months. Mobileye is trading at all an time high so a pull back is inevitable. Autonomous cars, once thought to be science fiction are very much becoming a reality. Believe the hype. It’s worth considering investing into companies at the forefront of these trends. Mobileye is a great stock to own for the long term, but unlike their automated driving software, Mobileye could take you for a wild ride before you get there! Stay posted – exciting offshore investment opportunities are always on the horizon.
Wade Dawson is an American living in Johannesburg and is the Africa Regional Manager for Austen Morris Associates. For more offshore investment tips go to www.austenmorris.com or visit AMA’s LinkedIn page. Reach Wade via e-mail at email@example.com or follow him on twitter @wadedawson4.