Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Monday, 18 April 2016

The next hot favourites

We are entering an age of advancement where information flow from places to places instantaneously, connecting people closer. This trend of changes allows some companies to thrive while others to be beaten and become obsolete. I believe we should be seeing more consolidations and reorganisations of the industries. Here are some of my thoughts of the imminent hot and booming industries:

1. Logistics industry

People are either becoming more lazy or more efficient and with the advent of e-retailing, there is a worldwide exponential growth in e-commerce. While e-commerce companies such as Alibaba, E-bay and Amazon are already priced in crazy nominal numbers, the valuation of the supporting industries for this technological-support boom has not been justified yet. Global sales of business-to-consumer e-commerce alone is $1.233 trillion. Imagine the logistical support needed to facilitate this global movement of goods. There are 2 of such companies that are listed on the SGX which are in good position to capitalise on this. They are GLP and SingPost. However, in my opinion, their current valuations are slightly on the high side, hence it is advisable to standby and wait.

Recommended Post: Consolidation of Singapore REITs

2. Healthcare and related industry

As population increases and people live longer, the demand for healthcare will only increase. This is especially when Singaporeans are growing more affluent and are seeking better health solutions. Coupled with the government's assistance to make healthcare more affordable to the mass, the market will expand further with grants and assisting policies, making it extremely favourable for this industry. As mentioned in my previous post, Cordlife is one of such companies. The recent buyout of Biosensors by a private company also shows the potential of this industry.

3. Education-related industry

The global market has become much saturated with bachelor graduates and the demand for higher education is growing as people seek to differentiate themselves with better academic credentials. This has fostered the boom of another industry: Education. While there are not many opportunities to invest in the education sector unless you literally open a school/college, there are many education-related sectors that can benefit from this. One of such examples is providing student accommodation. While there are many factors pertaining to the portfolio of hostels' locations and perceived popularity of college standards in the area, it is an exciting new investment area.

It is important to notice the changes and trends around us as they might present an opportunity to make money. It need not be a giant macro economic view of how the global markets are going to interact but they can be as small as how people are reacting to certain brands or companies. You never know when such observations can lead you to your best investment!

Recommended Post: What to own during rate hikes?

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