Sectors To Look At In The Current Decade

  • Jan 02, 2020 GMT
  • Team Kalkine
Sectors To Look At In The Current Decade

A brief look at the past

The last 10 years or the passing decade had been very volatile for the businesses around the world, especially with most economies trying to rebound from the severe impacts from the 2008 global financial crisis, which saw some of the worst financial horror stories as well as the global trade tensions that came at fore at the end of 2018 and continued to haunt the global business environment throughout 2019 as well as the United Kingdom’s decision to leave the European Union in 2016, which turned out to be a huge factor in deteriorating economic climate in the latter half of the decade. The technology sector was probably the one that was least impacted by the financial crisis, as the innovations in this area, especially in the spaces of machine learning, Artificial Intelligence as well as virtual reality, became a catalyst for growth for this industry. In terms of numbers, as per some media reports, the sector grew by 328 per cent in the years between 2009 and 2019 with the advent of companies like IBM Corporation, Mitsubishi Electric and Sage Group in the United Kingdom as well as a wide pool of companies coming out of the Silicon Valley such as that of Amazon, Facebook, already established Google and its parent Alphabet. This was driven by the investors’ search for growth in this period, more so after the 2008 recession. This resulted in the investors paying up to get growth, and not, growth at a reasonable price (GARP), or rather, growth at any price. This was followed by the Consumer Discretionary sector which grew at the rate of 301 per cent during the last ten years with the consistent performance and new innovations by companies like Walt Disney, McDonald's, Netflix, and Priceline Group. Streaming services like Netflix, Prime Video, and Hulu, HBO Go and the newly launched Disney Plus have seen growth like never before with viewers moving on from the traditional cable services. Other better-performing sectors have been Healthcare with a growth of 245 per cent and Industrials which was up by 193 per cent. If we talk about the sectors that performed poorly, the Energy sector displayed a downfall of 1 per cent and the Communication services only went up by 59 per cent.

After 2011, however, financial stocks have rewarded investors with great returns. It has been reported that barring 2011, the time of the European debt crisis, and 2015, when banks were tormented by Non-Performing Oil Assets, financial stocks have been a decent spot to be. Short term finance costs have expanded, particularly, and the bank profits have bounced back.

Factors that can impact the growth of Industries in the United Kingdom in the Short Term

In the short term, it is very apparent that factors like Britain’s exit as a member of the European Union or “Brexit” as the process is called, is likely to cause the biggest impact to businesses around the United Kingdom. This is because this process will affect the current trading scenarios between European Union and various other countries and any trade deals with the United Kingdom which will likely be uncertain if the Brexit is a no-deal scenario. Other factors in the short term would likely be the United Kingdom government’s internal policies and regulations in terms of both the monetary policies as well as business policies. With policies such as the legalisation of Cannabis in the pipeline which will likely affect the healthcare industry, investors still do not seem to be confident which also has been a reason for these companies not being able to attract a larger volume of capital.

Sectors to look forward to in the next decade

  1. Financial Technology (FinTech)

FinTech - is reshaping in the manner which established financial institutions consider themselves building, operating and driving their organisations. FinTech is making new products as well as services empowered by the utilisation of innovation - from web based lending platforms that enable people and organisations to loan and borrow between one another, to robo-financial consultants and advisory firms, and at the same time covering the lines among conventional as well as non-conventional financial services organisations. A survey by a group of experts conducted in 2016 had reported on the advantages of digitising the industry, creating mobile-only banks; the capability of blockchain technology, the innovation that supports the bitcoin currency, to empower the sharing of information between organisations that have contrary objectives; and the ascent of 'InsurTech', which is the new Insurance technology area (cars or otherwise) expected to produce insurance solutions and services, while remote gadgets, wearables and genomics to drive enhancements in risk and loss appraisals. This has been driven by the new digital payments systems rising in the latter part of the decade gone by.

 

  1. Manufacturing

Conventional Manufacturing field is in the realm of witnessing a gigantic change, fast-tracked by exponentially developing innovations from shrewd robots and 'cobots' (the name given to cooperative machines) to self-ruling automatons, sensors and 3D printing. Inside the sector, it is being alluded to as 'Industry 4.0' - the fourth Industrial transformation or revolution. A research from one of the world’s biggest consulting firm around Industry 4.0, predicts that the eventual fate of the Manufacturing segment will be driven by four mechanical interruptions: the ascent in information and data as well as analytical capabilities, computational power, and availability, the development of examination and business-insight capacities; new types of human-machine communication, for example, touch interfaces and Augmented reality frameworks; and enhancements in moving computerised guidelines to the physical world, for example, propelled apply autonomy and 3D printing. The researchers anticipate some forty to fifty percent of hardware and equipment in processing plants are expected to be supplanted throughout the following decade. The new innovations are probably going to make new plans and processes for producers as well, from pay-by-use and membership-based services (something Rolls-Royce has spearheaded in its jet motor engine business) to permitting or monetising the incentive in their expertise or information.

 

  1. Healthcare

The better utilisation of innovation can possibly change the quality and improve the productivity of the healthcare segment by 'enabling' patients to assume greater responsibility for their wellbeing. A recent report from one of the world’s leading research companies had predicted a reduction in travelling and waiting times as doctors consultations will become progressively virtual and care will be delivered at the home of the patients. Paper prescriptions and drug store visits could well be supplanted by home deliveries. Medications, delivery services and packaging might collaborate with wearables and portable wellbeing (mHealth) applications to follow adherence, oversee dosage and recharge stock. Similarly, wearables and smart pill gadgets will follow patients' ongoing physiological reaction to drugs. Blockchain tech could be utilised to empower patients to get to their wellbeing records - something previously being directed in Estonia. What's more, the further improvement of automatons and drones could empower the delivery of specific prescriptions and drugs in places that have a poor framework. It vows to be a white-knuckle ride - but a robust one. Another factor in the healthcare area is the ageing population as well as rapid advances in biotechnology that could lead healthcare business becoming a certainty to flourish in the years and decades ahead. The healthcare area is very vast and expansive and indeed, even an individual with no contributing experience can think about some particular region of the healthcare business, for example, Hospital conglomerates, institutional insurance providers, insurance agencies, drug makers and developers, biomedical organisations, or Biotech Equipment developers and service providers. Additionally, when numerous enterprises are performing poorly because of adverse monetary conditions, the healthcare business can perform generally well since individuals still need to see the specialist and purchase their medications, paying little to no heed to financial conditions. Consequently, the healthcare business is viewed as a "defensive area" in a business sense.

  1. Retail

Experts are “Cautiously Optimistic” for the United Kingdom retail sector as we welcome the new decade. An apparent end to the political vulnerability that has tormented the economy and customer certainty for more than three years will probably ease, if not end, for some customers who will now open the strings of their wallets and begin to spend once more. It is not necessarily the case that retailers should take things easy and not be on their guard as the customers will still expect great products to arrive into the market and investors will look for decent financial performance from these companies. Those that have essentially robust organisations – that can adjust to the changing economic situations that Brexit will bring, and with the moving customer requests throughout the following decade – the sector will have the option to exploit any rise in buyer confidence following the latest General Election as well.

With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities. 

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