Four key investing trends for 2022

Through Valerie Hernandezinternational banker

OWith 2021 characterized as the year of the return of the pandemic, the world is keeping its fingers crossed, hoping that the strong economic recovery can continue through 2022. With that in mind, next year will hopefully prove a year of significant growth for a number of countries. important industries, with many opportunities for investors.

Here we look at four investing trends that are exceptionally promising for 2022.

Durability

Whether it is renewable energy, ESG (environmental, social and governance) themes or green finance (such as green bonds), the trend towards investing sustainably has accelerated considerably in recent years. The effects on the sustainable, impact and responsible investing classes of the growing adoption of green energy and growing global awareness resulting from the pressures of major sustainability issues such as climate change, diversity and the inclusion will be unequivocally positive in 2022.

Taking renewable energy as an example of such promising prospects, the International Energy Agency (IEA) found in May that annual additions of renewable capacity in 2020 had increased by 45% to nearly 280 gigawatts (GW). , the largest year-over-year increase. since 1999. And even more stunning is the IEA’s projection that, with exceptionally high additions of renewable capacity becoming the “new normal” this year and next, renewables will account for 90% of the expansion of the new electrical capacity in the world. “Solar PV development will continue to break records, with annual additions reaching 162 GW by 2022, almost 50% above the pre-pandemic level of 2019,” according to the IEA. “Global wind capacity additions increased by more than 90% in 2020 to reach 114 GW. While the market’s annual growth rate slows in 2021 and 2022, it is still 50% above the 2017-2019 average. »

And with COP26 in November (26and Conference of the Parties on Climate Change) in Glasgow, Scotland, providing the world with a glimpse of progress being made on several sustainability issues, investment managers will be keen to push ESG themes further within the framework of their fund allocation process. According to French bank BNP Paribas, factor investing – targeting specific drivers of return across asset classes – will be crucial to underpin the success of investments in this area. “ESG integration in factor investing aims to improve the ESG characteristics of the portfolio while keeping factor exposure at a very high level,” explained Stanislas Mesland, Head of Equity Strategies in the Quantitative Investment Strategies team. of BNP Paribas. “It improves our offering by taking into account not only the financial parameters of the companies, but also the non-financial parameters, in order to improve the selection of securities. Our research shows that by combining factors and ESG, investors can improve long-term performance, reduce risk and increase diversification.

Electric vehicles

The sustainable investing boom will also extend to connected markets, with electric vehicles (EVs) perhaps best placed to capitalize. Indeed, electric vehicles represent a crucial mechanism for governments, industries and consumers to reduce their carbon footprint and achieve their formal and personal clean energy goals.

The Paris-based International Energy Agency (IEA) noted earlier this year that around three million new electric cars were registered in 2020, which was an all-time high and 41% more than in 2019. “While they cannot do the job alone, electric vehicles have an indispensable role to play in achieving net zero emissions globally,” said Fatih Birol, IEA Executive Director. Current sales figures are very encouraging, but our shared climate and energy goals call for even faster market adoption.”

In its outlook for 2022, electric vehicle charging company Virta expected 6.4 million vehicles (electric vehicles and plug-in hybrid electric vehicles, or PHEVs) to be sold globally by the end of 2021. , a massive 98% increase over 2020 figures. “2020 was already a major leap forward in terms of electric vehicle sales. 2021 is a whole new story. The market is growing. It’s growing fast. And it’s growing everywhere,” the company said.

Indeed, next year should see a wave of new electric vehicles hitting the market. “Lucid is on track to deliver thousands of its ultra-premium Lucid Airs in 2022. NIO is expanding into Europe for the first time ever. The Fisker Ocean is expected to hit the market in late 2022. BMW and Audi are launching an all-new fleet of premium electric vehicles in 2022. The Rivian pickup truck will make waves. Canoo’s lifestyle van is expected to begin deliveries,” said Luke Lango, InvestorPlace‘s senior investment analyst, early October. “There’s a lot on the electric vehicle case in 2022. And that’s why we’re beating the table about electric vehicle stocks right now. We believe investors have a generational opportunity to buy shares of high-quality electric vehicles at a huge price before embarking on a huge run in 2022 and beyond.

Artificial Intelligence (AI)

Although still largely in an evolutionary stage, it seems likely that AI will make significant progress in 2022, positioning itself as arguably the most important and influential of the new wave of technologies currently transforming the world. Almost every major industry around the world is leveraging AI and increasingly intelligent machines to supplement the work done by humans or replace it altogether by providing a higher level of skill.

Chatbots are helping bank customers sort out their financial affairs, doctors are using AI to more accurately diagnose patients and make predictions about their future health, and businesses across all industries are using automatic algorithms to detect cybercrime patterns.

According to a recent Gartner survey of technology and service providers intending to invest in AI, one-third said they expect their investments to exceed $1 million over the next few years. next two years. Additionally, 87% of survey respondents who considered AI a major area of ​​investment believed that investment in AI would grow at a moderate to rapid rate through 2022.

“The various and rapidly evolving AI technologies will impact all industries,” said Errol Rasit, senior vice president of Emerging Technologies and Trends (ETT) at Gartner. “Technology organizations are increasing their investments in AI as they recognize its potential not only to assess critical data and improve business efficiency, but also to create new products and services, expand their customer base and generate new revenue. These are serious investments that will help dispel the AI ​​hype.

And while the development and effective implementation of AI is still in its infancy, as adoption of the technology is not always successful at this stage, the opportunity to invest in what is sure to be one of the most transformative and consequential technology themes in existence today cannot be ignored.

Cannabis

Perhaps not as obvious as other investment themes currently in the headlines, the cannabis industry nonetheless shows immense room for growth in 2022. Arguably the main driver of this growth is the wave of legalization actions for adult use and for medical purposes across the United States, including in large and highly populated states such as Connecticut and New York.

In its report “Cannabis Market Projections for US & Canada: July 2021”, Seattle-based cannabis industry analyst firm Headset expected the US cannabis market to exceed $30 billion. in 2022, updating the $28 billion estimate provided by the company in the first quarter. The revision came primarily following new legislative approvals allowing programs for adults in New York, New Jersey, Connecticut and New Mexico, as well as a medical program in Alabama.

“Last quarter, we estimated that the US market would reach approximately $28 billion in annual sales by 2022. With the addition of several new cannabis markets (Alabama, Connecticut and New Mexico), we now expect that the US cannabis market will exceed $30. billion in 2022. There isn’t much change in the Canadian forecast for 2022, but that’s to be expected since the market is fully legalized,” according to Headset’s report, which also predicted that the cannabis industry increase by 27.7% to $23.6 billion. by the end of this year and another 29.3% to reach $30.5 billion in 2022.

According to Sami Toivola, the report’s lead data analyst, flower will account for the largest retail marijuana market share in 2022 with 47% of all product sales (up from 42% this year), followed by pens and cartridges. vape at about 22%. Sales. Edibles, pre-rolls and concentrates will each account for around 10% of the market.