Citywire Global canvassed leading managers to find out which concepts, innovations and stocks they will be focussing on in the coming year.
‘A number of industrial and consumer devices are also being connected via the internet, and will generate more-and-more data of their own,’ says Solomakhin.
‘Against this backdrop of ‘big data’, the demand for data analytics is expected to rise. Furthermore, the growing desire for device-neutral access to content everywhere should spur the proliferation of the ‘cloud’.’
Stock example: Cisco Systems – ‘The world’s largest communications networking company, which is trading near multi-year valuation lows, has a strong balance sheet and is seeing improving business fundamentals.’
Gordon Happell, who works alongside Euro Stars A-rated duo Stuart O’Gorman and Ian Warmerdam on Henderson’s technology strategies, expects a considerable uptake in electronic forms of payments as consumers shift away from cheques.
‘Currently 85% of payments in the world are in cash form (source: MasterCard). We expect technological innovations such as mobile wallets and the growth of e-commerce to drive strong growth in the number of card transactions globally,’ says Happell.
Stock example: ‘We continue to hold both Visa and MasterCard as key beneficiaries of this theme and believe both companies can deliver in the region of 20% annualised EPS CAGR over the next few years.’
‘We also own companies such as ACI Worldwide and Fiserv, both benefit from continued growth in the use of internet/mobile banking across the globe as well as generating growth from card transactions,’ he says.
The Euro Stars A-rated manager says: ‘Online gambling so far accounts for only 8% of a global gambling market. In regions like the Nordics the online penetration is around 20-25%.’
’Regulation offers opportunities as Europe is on the way, country by country, to open up its markets. Some of the American states also seem to be discussing a liberalization of online gambling.’
Stock example: Playtech and Net Entertainment – ‘At the same time mobile gambling is picking up speed, which should help drive demand for the software providers.’
Daniel Roarty, manager of the AllianceBernstein-International Technology fund, is focusing his attentions on mobility but concentrating on mobile services rather than the mobile devices, such as smartphones and devices.
‘With smartphones now representing 50% of all global handset unit sales annually, future unit growth will slow and sales will inevitably shift away from premium devices as the next 50% of global share is comprised of mostly lower-income emerging markets consumers,’ says Roarty.
Stock example: Samsung - ‘Given its broader portfolio and strong position in low-end smartphones we consider Samsung well positioned to handle this shift. We also continue to favour emerging market internet services companies due to rapid growth in connected users and usage.’
Presenting a more overarching theme is ING’s Jeroen Brand, who runs both the ING (L) Invest Information Tech and ING Information Technology funds. Brand expects overall IT efficiency – combing the best of cloud computing, mobility and data – to be a theme to follow.
‘There are improvements we are going to see in the way people use technology and use IT. For me, that is the most important theme for the tech sector as I see it.’
‘This combines all the points. So, for example, using tablets means mobility and it means businesses can work wherever and staff can work from whenever also. It is about improving that interaction and use of time, as well as location,’ explains Brand.
‘Also, in big data, we now have access to more data than we ever had before and that can be mined for IT efficiencies. Companies can collate and mine those data sets to find what that company needs in order to improve the work flow and efficiency of a business.’
Stock example: Amazon – ‘Then this leads onto cloud computing which has implications for capex, once again in IT efficiency. As the data you have and create will be stored more and more by an outsourced party - be that Amazon or some other third party source.’