Janus Henderson Investors dives into the future of technology. The asset manager expects the metaverse to really pick up speed in 2022. This also applies to electric cars. Tech companies need to consider increased government regulation.
Janus Henderson Investors has high hopes for the “internet 3.0” or “metaverse” for the coming year, in which the physical and virtual worlds increasingly meet.
The asset manager also believes that valuations in the technology sector are high, but not too high. Also, there are big differences between them.
Janus Henderson also hopes for a cautious normalization of supply chain issues and hopes that many countries will follow China’s example of tighter regulation of technology companies.
Janus Henderson writes that in the report Global Technology: Driven by the Force of Secular Issues in the Real World and Beyond†
The fund manager begins the analysis with supply chain problems caused not only by coronavirus lockdowns, but also by the US-China trade fight and a series of natural catastrophes.
This year, some of those problems are likely to go away. How beneficial this is for technology companies differs by sector. For example, a producer of electric cars will benefit more than a producer of telecommunications networks.
The second point Janus Henderson raises is the Chinese urgency to control technology companies. The fund manager believes that this is a trend that will be adopted by other countries. This is almost inevitable because some companies have become so powerful and their technologies so disruptive (disruptive) that more control is needed.
The most exciting development, according to Janus Henderson, is the metaverse. Investors should beware of hype, but there is no doubt that the possibilities of virtual reality and augmented reality are great, according to the asset manager.
The Metaverse is the entire network of interconnected 3D virtual spaces in which users can interactively navigate and interact, often through avatars.
Think, for example, of a mechanic doing a repair remotely with VR goggles; meeting of players in the virtual world; go to a concert with someone, while one is at home and the other is actually present; or a consumer shopping in a virtual supermarket with his avatar.
VR goggles will certainly play a big role in the metaverse, but it could also move into touch-sensing suits or gloves.
Another key theme in 2022 will be further electrification of transportation from cars to buses and trucks.
According to Janus Henderson, we have entered a new phase in which new companies continue to be incorporated, but at the same time others are losing or merging with other companies. The first wave of mergers and acquisitions is already coming.
Janus Henderson will not deny that the technology sector is expensive. This makes the sector sensitive to increases in interest rates and inflation. On the other hand, there are big differences – not everything is expensive – and what should not be underestimated is the deflationary effect of technological development.
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The metaverse, artificial intelligence, robotization and automation. These are all developments that can make production cheaper, more efficient and less labor intensive. In the long run, this will drive prices down.
the IEXProfs Editors It is made up of several journalists. The information in this article is not intended to be professional investment advice or a recommendation for certain investments. Editors may hold positions in one or more of the funds listed. Click here for an overview of your investments.