It’s been nearly two years since the world was turned upside down by the news that the Covid-19 virus was starting to spread at a rapid rate. From the initial confusion as to what the implications would be, to the realization that we may be embarking on a life-altering event, the outcomes have thus far been nothing like anyone has expected, at both a personal and professional level.
If you, like many, have been forced to adopt a hybrid working model due to regulations requiring intermittent complete or partial shutdowns, then becoming used to communication via electronic means has required a rapid adoption. While the process has been easier for some and harder for others, it may be that the current Covid-19 ‘crisis’ has catapulted humankind into a new dimension through all aspects of life. Until the end of the initial lock-down, communicating with your non-immediate relatives, friends or colleagues had to be done via electronic means, meaning that companies that provide such services saw massive demand for their products which added significantly to their top and bottom lines over the short and medium term while slowly raising the outlook for long term revenue growth as we adopt to using these products, by force or by choice.
In the mid-2000s, searching on the internet later became known as ‘Googling’ while today, if you intended to message some would you may say ‘I’ll WhatsApp You’ or “let’s hop on a Zoom call” if you prefer a a ‘face-to-face’ conversation. In the corporate environment, Nasdaq-listed Zoom Video Communications (Share Code: ZM) or Microsoft’s Teams application has played an integral role in driving collaboration between colleagues, service providers and clients. Not only have the apps been used to check up on a project but it has also been used as a ‘boardroom meeting location’ for large groups of people. Back in January 2020 (before the worldwide Covid-19 announcement), our offshore research identified Zoom Video Communications as a buy based on an attractive technical chart setup. Whilst we expected the share to find positive momentum, the counter exceeded our expectations by becoming one of the best performing shares in the subsequent months. From around $72 on 09 January, the share traded at $150 3 months later, $255 6 months later and peaked at $588 9 months later in October 2020.
At the time we stated: “Zoom has been flagging upside and is starting to show positive momentum with the price having made a second bull cross of the 8/21 EMA supported by volume. The RSI trades the bull zone with a 62 reading and should we see a pullback to $70 level, traders should consider a buy for some medium term upside momentum.”
While South Africa provides a home base for most investors, the JSE is relatively tiny when compared to the global equity market. This 2016 image from the Visual Capitalist highlights 16 global exchanges that were each more than worth $1 trillion at the time, while the second image highlights how 93% of all global stock value is divided between 3 continents. Over the last 5 years this figure has of course grown with equity values rising substantially. In fact, some of the companies listed have exceeded the $1 trillion mark by a mile.
In a more recent data extract (Oct-2021), a graphic from Statista shows us the world’s largest stock exchanges by market capitalization of listed companies (figures in trillions). If you can see the JSE is way down the list, slightly ahead of Brazil.
Whilst local stocks such as Naspers, Sasol and Anglo American Plc provide investors with access to the technology, oil and chemicals as well as the diversified mining sector, investors may be missing out on a myriad of exciting new and emerging sectors on a global stage. Via Naspers, investors have access to Tencent however there are also other Chinese internet stocks such as Alibaba (one of the world’s biggest e-commerce platforms), JD.com (it’s e-commerce competitor) as well as Baidu, which is considered the ‘Google of China’.
You are also able to access these names via ETFs. In recent years, Satrix launched a China-focused ETF which provides easy access for investors to allocate capital to global stocks such as Alibaba, Ping An Insurance and NetEase.
On the JSE, FinTech opportunities are quite limited, however, the Nadsaq in New York allows us to access leading companies such as Visa, Mastercard and American Express as well as emerging but dominant payments services providers such as Paypal and Block (formerly Square Inc). These companies have commanded a global presence and have acquired a global customer-base with revenue exceeding the market cap of most of our JSE-listed large cap stocks.
The impact of Covid-19 has been devastating in all aspects with a profit-making attitude seemingly unimaginable during the chaotic period, however, even here one is able to seize potential opportunities. Take for example companies such as Moderna which appeared on our radar earlier this year at $169 from which it rallied strongly to +$480. On the global stage, access to specialized healthcare and biotechnology firms are only a click away however the JSE provides limited access to such sectors.
Not only are global stocks available, there is also a wide array of Exchange Traded Funds in offshore markets. Whilst the traditional/vanilla ETFs can be access via the JSE, offshore markets give investors access to niche themes such as Online Retail, Global Infrastructure as well as Country Specific opportunities. Looking for access to Taiwanese, Hong Kong or Mexican equities via ETFs? We’ve got access to those.
If you think clean energy is an integral part of the future, why not buy a Solar ETF?
If you believe that the Uranium sector still has legs following it’s strong recovery, the offshore markets offer an array of companies and Exchange Traded Funds (ETFs) by which to access to sector.
If your preference is agricultural commodities, then looking at the Teucrium Funds listed on the NYSE may be an option:
Whichever Stock, Sector ETF, Index, Commodity or Currency (including Cryptocurrency) you’d like to trade or invest in, Unum Capital most certainly has access to the vast majority of instruments. Instead of limiting yourself to a small pool of stocks and ETFs, exploring global opportunities allows a trader and investor to grab hold of nearly any opportunity imaginable.
While going offshore also provides access to an array of businesses, investors also protect themselves in the event of a weakening Rand.
Give the Unum Capital Trading Desk Desk a call today on 011 384 2923 or email us at tradingdesk@unum.co.za to find out how you can access opportunities on a global stage.
