One of the best investment options in 2021

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While 2020 was a year we would love to forget, it has taught us a valuable lesson that we can never predict for sure what each year will bring for us. With that being said, many experts believe that the year 2021 is going to be a better year than its predecessor. Our team has listed some of the best investment options in their opinion that investors should look out for in 2021.[1]

Healthcare

The Healthcare industry has been enjoying a fair share of spotlight since the beginning of 2020 as the global pandemic continues to affect billions of people worldwide. Historically, this sector has never been very attractive for investors as it lacks long term growth prospects. However, the coronavirus has underlined that this sector demands further investment.

AstraZeneca and Pfizer found a vaccine, but they experienced underperforming stocks in the year 2020. However, they have proved that they are capable of innovation, and they should be considered when deciding to invest in this sector.

Even Warren Buffett, a world-famous business tycoon, has shown an interest in this sector by investing $136 million in Pfizer stock, and $1.8 billion in AbbVie, Merck, and Bristol Myers Squibb. 

Technology

According to the latest research, it is estimated that around 25% of the UK population plan to permanently change the way they shop even after the pandemic comes to an end. Similarly, 62% of senior executives, 58% of entry-level employees, and 46% of office staff are not willing to spend five days a week in their offices. Another research highlights that low-tech (old school) businesses were hit hardest during the lockdown, while tech-friendly companies thrived.

The trends of 2020, such as remote working, online shopping, e-learning, and online entertainment/streaming services, will continue to grow as lockdown tightens and relaxes periodically. However, any signs of our return to normalcy could indicate the end of this run. This would mean that companies like Amazon, Zoom, and Netflix could see some fluctuations in their share price throughout 2021.

Many financial analysts predict that online retail, consumer electronics, and cloud computing will continue to generate higher profits, and you can expect long-term growth in these sectors.

Real Estate

During the last few months of 2020, the UK's annual house price growth rates reached a five-year high. Similarly, mortgage approvals are also at their highest level. This increase was primarily because of the stamp duty holiday that triggered a wave of house sales. But it is important to understand that this stamp duty holiday expires at the end of March 2021.

Apart from this, it is expected that unemployment rates will increase in summer 2021, and Brexit could also add substantial downward pressure on real estate prices. Experts predict that real estate prices will go down in winter-spring 2021, so make your investment decisions accordingly.

China

Despite being the first country to experience the devastating impact of the global pandemic in 2020, China came back stronger by successfully implementing its effective disease-control strategies. China was one of the very few that found a way to handle the threats of COVID-19 better than other countries, and their stock market is proof for such a claim. Chinese stock market grew by around 11% in November 2020, and it continues to grow in early 2021.

After seeing the Chinese stock market's success, foreign direct investment into China grew by 6.4% to £86 billion from Jan to Oct 2020. Top multinational firms such as ExxonMobil, Allianz, and BMW have also enlarged their investment in China.

If you are an investor in the UK, you may benefit from this by investing in UK-based multinational companies that do business in China, such as 'InterContinental Hotels Group' and 'Diageo', for example. 


Renewable Energy

Many predicted that renewable energy would account for 12.4% by the end of 2023. However, due to Covid-19, many renewable energy projects have now been delayed. As the world becomes increasingly conscious of climate change, many global leaders, including the newly elected US President Joe Biden, have made it clear that they aim to reduce their reliance on coal and other non-renewable energy sources.

As a result, it is expected that renewable energy stocks would see substantial growth in the foreseeable future, while oil and gas markets could experience a decline. 

 

Brexit

After months of negotiations, the United Kingdom and European Union have finally agreed to a deal that allowed the UK to withdraw itself from the European Union and the European Atomic Energy Community at the end of 2020. This means that the year 2021 will be a new beginning for the UK and especially the GBP. In 2021, the GBP will start behaving independently, and the GBP will likely remain volatile throughout trade negotiations between the UK and leading global powers.

As an investor, you should keep an eye on the FTSE 100, UK blue-chip stocks (such as Barclays, Persimmon, and Travis Perkins), and GBP currency pairs like GBP/USD and EUR/GBP.

Bottom line

Chinese Zodiac says that the year 2021 is the 'Year of the Ox.' Many experts and investors wonder if this means that this year will show a bullish trend, a period when stock prices and prices of other assets are on the rise.

The year 2020 left the UK economy with a severe recession, and it is very difficult for investors to be optimistic. The pressure on the healthcare sector continues to grow while the UK economy shrinks and the unemployment rates touch their highest level. The United Kingdom is in a challenging position, but the year 2021 brings hope and with-it countless investment opportunities.

These are the investment sectors that caught our eye, and we believe it may be worth the effort to follow these closely in the year 2021 – technology, healthcare, renewable energy, and real estate.

If the year 2020 has taught us anything, forecasting the trajectory of a global pandemic is incredibly difficult, even for experts. We hope that we are on the road to normality as 1.5 million UK citizens have already been vaccinated for COVID-19 and the numbers keep growing.

 

  [1] This article is not an investment advice and should not be viewed as such.

 


References:

https://www.ig.com/en/trading-strategies/what-are-the-best-investment-ideas-in-2021-201217

https://www.thetimes.co.uk/money-mentor/guide/guide-investment-trends/