Bank Zero chairman Michael Jordaan said too many investors have near zero exposure to the future, but smaller JSE-listed stocks allow South Africans to gain this exposure.
Jordaan told Daily Investor that exposure to the future means investing in industries and businesses that will benefit disproportionately from future macro developments.
He used artificial intelligence, 5G, fintech, renewable energy, biotechnology, and drones as examples of such developments.
“Unfortunately, most of the large market cap stocks in South Africa do not fall into such a ‘future’ category,” he said.
“However, there are some smaller listed stocks with future exposure that can be bought locally, as well as some holding companies owning future-oriented businesses.”
He said these stocks also often trade at a discount to their net asset value, making them even more attractive.
In addition, most new global innovations come from developed markets such as the US – “think NASDAQ” – and Europe.
China is also a leader in industries such as telecommunications and electric vehicles.
“In my own Venture Capital portfolio, I have tried to bet on a future world where technologies can solve many of the problems which we experience,” he said.
“For example, Rain makes abundant home WiFi affordable by using an advanced 5G router, and Bank Zero makes banking free and more secure by developing its own smartphone software.
Jordaan’s AI Capital Partners also has a portfolio of investments that have tilted the playing field in their favour using technology.”
His comments align with Satrix CIO Kingsley Williams, who told Classic Business that several global ‘mega-trends’ in investing are set to shape the industry for the foreseeable future.
He identified four trends set to shape the global economy and, therefore, the financial market in the next few years –
- Ageing populations.
- Technology and artificial intelligence (AI).
- Environmental, social, and corporate governance (ESG).
Williams defined ‘mega-trends’ refer to long-term structural shifts impacting the global economy and, by definition, the financial markets, which reflect the global economy and move around the global economy.