The US is, in a sense, the central point of financial world. As of the year 2021, it accounted for nearly 40% of both global equity and fixed income markets, with a total volume of more than $100 trillion. In addition, it’s also home to global top performers in every industry and the most innovative and disruptive businesses across all industries.
Due to its robust financial markets and its favourable regulation, it could be an opening to investment opportunities throughout the globe. According to me, having some exposure to US markets US market is essential for any Indian investor. While the India market is still attractive but it is crucial to be able to get some protection from the risk of India.
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From this perspective I would like to draw attention to some appealing aspects that are popular in the US.
1. Biotech
Around 20 percent of GDP, health-related spending is in the US is close to $4 trillion. But remember that India’s GDP total is almost $3 trillion. It is a clear indication that due to the scale of the market as well as the funds available, the majority of the disruptions in the biotech sector occurs within the US.
Particularly, fields like immunology and genomics are fascinating. Genomics uses the DNA of an individual to create a custom the treatment they receive and Immunology is the process of empowering your body’s immune system to combat illnesses.
In the last year, the expense of mapping the human genome has been able to record an 99.97 percentage drop from $1M to $300. In general markets for genetic therapy is expected to increase by 35-40% per year over the next five years.
A prime example of the potential of this area was the application of two significant RNA vaccines as highly effective weapons to combat Covid. It is true that Pfizer, Biontech and Moderna who developed these vaccines are listed as being in the US.
2. Lithium
The general consensus is that electric vehicles will be the dominant sales channel for vehicles powered by internal combustion engines by 2030. The long-term emphasis on climate change and the improvement of unit costs means that renewable sources are growing their percentage to the overall energy market. Mobile devices are becoming ubiquitous and are considered essential in many regions around the globe.
What is common to these three trends?
Lithium. Battery technology based on lithium is crucial for their growth. There are many fascinating companies that are involved in the supply chain for lithium, which includes mining refinement, battery production and refinement. The explosion in demand and speculation has resulted in prices for lithium increasing by 750% since the start of 2021.
But, like all commodities, there’s many supply chain and geo-political concerns to be considered.
3. REITs
REITs are relatively new offering in India but they’ve been in existence throughout the US since the 1960s. They are now a mature asset class and there are several specialized REITs that invest in traditional sub-asset classes like malls, offices, residential real estate etc., but there are also some that target interesting, growing assets like warehouses/fulfilment centres and data centres.
4. China
China is in an upswing currently because of geo-political tensions rigid Covid lockdowns and a crackdown on technology and the real estate market crisis. But, the second-largest economy in the world is an essential part of the supply chain in the world and has an impressive domestic consumption. The US markets are the perfect opportunity for investors to make investments in China at attractive rates.
5. Technology
Most likely the most popular and talked about subject, which is why it is the one that requires the least words. It is no secret that the US hosts a number of tech champions who are one of the most successful businesses around the globe. Alphabet Amazon, Apple and Microsoft are among a group of world-class companies that demand a place of every portfolio.
In closing, I’d like to end with a cautionary tale about investing on only general trends. At the Berkshire Hathaway’s 2021 Annual Meeting, Buffett pointed out that in one of the most booming industries of the 20th century , automobiles – there were more than 2000 businesses that were no longer in operation.
In actuality, after the financial crisis of 2008 the market was down to just three remaining, Of which, two were saved from bankruptcy from bankruptcy by government officials from the US government. So that he was able to add that “…there was more to investing than knowing what’s going to be a fantastic business in the near future.” Therefore doing top-down analysis as well as identifying interesting themes are only one of many steps to a successful investment strategy.
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