A new era of “safety” is upon us.
In fact, it has already begun with the conflict in Ukraine. So, the new promises are giving way after a decade of dominance by the digital giants Facebook, Apple, Amazon, Netflix and Google, as the pandemic has accepted so-called FAANGs and is now delivered to destinies other than the rate hike. These are FAANG 2.01 titles well portrayed by T. Rowe Price’s Ritu Vohora. Here they are: fuels, aerospace, agriculture, nuclear and renewable energy, gold, and metals/metals. I am the mirror of a changing world. And they could be the next secular winners.
After all, the sudden war brought increased focus on the energy triple dilemma: security of supply, high costs, and environmental impact. While the net zero goal marked a turning point in the past year, there is no doubt that the invasion of Ukraine will accelerate the green transition to renewable energy and bring security to the heart of the scene. The dilemma lies in managing the goals, with scenarios differing, in the short term, between accessibility and supply, and in the long term, the absence of emissions. In any case, to achieve the green goals, the world will have to invest in new technologies. This means that opportunities are available to investors among facilities that provide green infrastructure, for example; o on the storage interface for rare metals and metals; But also with regard to heating pumps and building insulation.
The whole landscape in terms of spending on armaments has also changed. And since the defense sector is one of the well-established sectors – it has high barriers to entry and is a largely government-backed monopoly – it also has good anti-crisis antibodies. Because they tend to be insulated from input and wage inflation. Hence the new opportunities to watch. Defense budgets will be used for space, and thus for satellites, but also for advanced technology, including the Internet, 5G, and the means to securely collect and share data.
Food and Co
Then there is the Food Safety chapter. The invasion of Ukraine would disrupt the agricultural sector for years. In fact, Russia and Ukraine account for about 30% of world exports of wheat, 19% of corn and 79% of sunflower oil. Russia is also a major producer of fertilizers, including potassium, nitrogen, and phosphates. So much so that countries like Brazil import 50% of their fertilizers from Russia. The result is that long rest periods in wheat and fertilizer can lead to significant short-term food shortages, particularly in low-income developing economies. Not to mention that rising food inflation risks sparking civil unrest as spending on food is about to double. An uncomfortable prospect could lead to a more protectionist approach, in defense of internal supplies. This is why in general, in the face of rapid world population growth, agricultural crops become essential to feed more mouths. According to a WWF report, we need to produce more food in the next four decades than in the past 8,000 years. Roe Price says that is where the opportunities come between fertilizer producers and grain traders. In particular, the focus will be on reducing food waste, on more efficient storage and on innovation in vertical farming, in seed technology or in precision farming.
On the other hand, companies that provide the infrastructure for the digital economy, including IT security, can benefit from the rush towards digitization. More and more data is being uploaded to the cloud and cyber security is becoming increasingly important for governments, businesses and individuals. But the threat of digital wars is also increasing, as is the shift to electrification of the grid, which is more susceptible to outages. So investing in the right side of change means protecting yourself from uncertainty.