Dubai: When it comes to money, these year-end questions often come with a lot of added pressure: What if my investment decision backfires next year? Will I be richer or poorer next year? Can my savings last the entire year?
Nevertheless, many investors are likely turning their attention toward the next calendar year keen to understand trends and concerns that could shape the investment landscape in 2022.
As economies worldwide rebound, while low-interest rates made traditional investment avenues, such as fixed deposits and debt instruments, less attractive this past year, stock investments flourished.
Despite the pandemic, stocks on average rallied over 100 per cent as governments around the world pumped liquidity into the system to help their struggling economies. This liquidity found its way into the stock market in 2021.
So we will look at what stocks to buy in 2022, what industries analysts see booming, and if not stocks, what other investments are worth putting your hard-earned money in next year.
Vaccine: A theme that stayed dominant in 2021
The size of the COVID-19 vaccine market across the seven major markets – the US, Germany, France, Italy, Spain, the UK, and Japan – will increase from $13.6 billion (Dh50 billion) in 2021 to $19.5 billion (Dh72 billion) in 2026 at a annual growth rate of 7.6 per cent should annual vaccination be required, according to UK-based analytics firm GlobalData.
US biotech firm Moderna said it expects 2021 vaccine sales of over $18 billion (Dh66 billion). The company’s stock rose 372 per cent over past 12 months as a result.
On the other hand US-based Johnson & Johnson or J&J’s jab, the world’s first single-shot COVID-19 vaccine, aims to generate $10 billion (Dh36.73 billion) in vaccine sales by the end of 2021. It rose 7.7 per cent in the last 12 months.
Analysts forecasts British-Swedish AstraZeneca vaccine sales of $1.9 billion (Dh7 billion) this year and $3 billion (Dh11 billion) in 2022. Unlike its rivals, the shares of the pharmaceutical firm have fallen 8.6 per cent in the last 12 months.
With the pandemic continuing into 2022, the need for companies increasing the production of vaccines will remain well into next year, analysts evaluate.
However, aren’t the value of such stocks well out of reach of the average buyer? Also, isn’t any vaccine-related price action already priced in? Not necessarily, an example being the stock of AstraZeneca.
Best blue-chip stock to buy in 2022: AstraZeneca
Over the past three months, shares of AstraZeneca have fallen 5 per cent, while on average stock market benchmarks have soared by more than 5 per cent. Does this make it a stock that is ideally priced for growth? Let’s find out.
The company released its third-quarter results on November 12, which disappointed investors as it fell short of earnings expectations. The stock sank more than 6 per cent on the day.
However, analysts explain how the stock will fare better than its peers next year. The reason being that up until now, AstraZeneca hasn't been trying to make a profit from its COVID-19 vaccine.
While Moderna and Pfizer/BioNTech reap astronomical profits due to their COVID-19 vaccines, other drug makers, such as the AstraZeneca and the Johnson & Johnson, pledged to provide their vaccines on a not-for-profit basis until the pandemic comes to an end.
However, analysts evaluate how now the company is going to focus on turning a profit on the vaccine on any new orders, implying a potential increase in price. The company has been selling its vaccine for just a few dollars per dose, well below what other COVID-19 vaccine makers are charging.
During the three months ended September, AstraZeneca's COVID-19 vaccine generated over $1 billion (Dh3.67 billion) in revenue. Meanwhile, rival vaccine-maker Moderna reported $4.8 billion (Dh17.63 billion) in vaccine sales for the same period, and Pfizer's COVID-19 vaccine generated $13 billion (Dh47.75 billion) in vaccine sales, also during the same interval.
While it's unclear just how much higher AstraZeneca's COVID-19-related revenue may climb on an increase in the vaccine's price, its top line is likely to get a boost next year nonetheless.
Best penny stock to buy in 2022: Restaurant Group
Penny stocks are drawing new-found attention from retail investors. One reason for this interest is that many new traders see the penny stock market as a way of turning a small investment into a big pay out.
Penny stocks come in with higher risks but potentially higher rewards. You must be willing to take the risk of investing in penny stocks if you want to make big profits in the market.
Penny stocks which have a decent balance sheet, low or zero debt and a track record for paying dividend fare much better against their peers.
Another reason for the comparatively higher public interest in penny stocks is that, despite their volatility, penny stocks may seem like a safer alternative to cryptocurrencies.
While meme stocks tend to get most of the attention, many other penny stocks are drawing significant attention from investors. And as the broader market continues to look expensive and overvalued, these low-priced shares may look like a more attractive option.
One of the penny stocks to watch is the UK-based Restaurant Group, which owns restaurant brands like Wagamama. The stock has seen some recovery over the past year. When the stock market crash happened last year, it had fallen to a quarter of its present per share price of around 84 pence (Dh4.12).
But the recovery has not been consistent. And this is evident from the fact that it is still a penny stock. Earlier this year, it had broken out of its pandemic blues to touch pre-pandemic levels. But this resurgence was short-lived. In the last couple of months it has fallen back into penny stock territory.
However, in its recent trading update, the company spoke of outperformance compared to the market. It also increased its profit expectations, which several analysts have flagged as good signs.
Industry set for most growth in 2022: Technology
Analysts at US investment bank JPMorgan opine that stock investors who are looking to 2022 should keep technology in mind not just for reasons of growth, but also because of comparatively better profit margins across the board.
Investors next year are likely to see tech investment spending kick in as a key driver of economic growth, the analysts added.
The US ‘Nasdaq 100’ Index, which is filled with the world’s biggest computer, software, Internet and other technology stocks, is up more than 26 per cent this year, slightly outpacing gains in the key US ‘S&P 500’ index, a closely tracked benchmark globally.
Analysts add that the effect in 2022 may be much broader than individual tech companies’ returns. The important thing to recognise about the role technology can play, obviously as a sector itself it’s been quite profitable, it can enhance profitability in the other sectors where it begins to show up.
Investors are willing to pay for the earnings that technology, whether it be a sector or an investment, is able to drive.
The industry focus for next year is on automation. So next year, companies will continue to focus on running their operations in a relatively lean way.
VR or AR: 'Metaverse' set to become the future of internet in 2022?
The new vision for interacting with the online world, the 'metaverse', is essentially is a hypothesized iteration of the Internet, supporting online 3-D virtual environments through conventional computing, as well as virtual and augmented reality headsets. Metaverses, in some limited form, have already been implemented in video games.
Facebook's (now Meta) investment in virtual and augmented reality tech is turning heads. The company has sunk billions into both the software and hardware necessary to make the 'metaverse' a reality. Apple, Microsoft, and other tech giants are all doing the same.
While Meta focussed on virtual reality (VR) applications, experts predict an even greater surge in augmented reality (AR) interest. Companies (especially those in the business of creative design, entertainment, and communication) are to keep a close eye on the introduction of Meta's internet-of-VR (The Internet of Things (IoT) used to enable and even enhance VR).
Analysts evaluate how the 'metaverse' could be one of the biggest emerging product and service trends of 2022. There are only a handful of companies that are building the framework and technology that the metaverse(s) will exist on.
While some experts opine how 'metaverse' will help increase the adoption of cryptocurrency in the financial ecosystem, others argue that it could be the future of internet in the coming years, if not next year.
"While a fully functional, seamless persistent metaverse isn’t happening any time soon, metaverse-like features and advancements in how we connect with technology and the Internet are already underway and driving modest, incremental improvements," noted internet analyst Mark Shmulik at US-based brokerage Bernstein Research, in a detailed report.
Buy gold to hedge inflation in 2022: Analysts
Among the many ways in which COVID-19 affected the economy, the most tangible outcome was the impact on inflation. However, even before the pandemic struck, inflation was running high.
Most economies worldwide were in a tight situation with inflation higher than the mandate. Economic growth also fell to rare lows. Then the pandemic hit and the strain on supply chains forced inflation to remain high across the spectrum.
While most economies are now gradually recovering after being hit by multiple COVID-19 waves, inflationary pressures still continue. Larger companies worldwide are facing inflationary pressures and are passing on the increase in prices thereby causing a strain on household budgets.
This trend could continue in 2022 as well, multiple analysts reveal. Average inflation over the next five years is expected to be slightly higher than pre-COVID levels.
So veteran investors continue to reiterate that in order to hedge your bets against inflation, you could invest in gold, while adding that gold will help serve not only as a hedge but also as a strong strategic component in your portfolio for its returns.
The precious metal has delivered more than 54,000 per cent returns to investors in the last 75 years.
Bitcoin, cryptocurrency ETFs, NFTs to shine further in 2022
Bitcoin: Can Bitcoin surge past $100,000 (Dh490,000) in 2022? Traders expect the world’s largest cryptocurrency, Bitcoin, to fall back to around $50,000 (Dh245,000) in the weeks ahead, which could trigger a surge to $90,000 (Dh441,072) and beyond.
Every year is a rollercoaster for the world's most popular cryptocurrency and 2021 was no different. It started the year trading at just under $30,000 (Dh147,000), more than doubled by April, only to dip in the summer then rally to hit an all-time high of around $68,000 (Dh333,250) in early November.
Cryptocurrency ETFs: The recent launch of the ProShares Bitcoin Strategy ETF (exchange traded fund) on the US New York Stock Exchange (NYSE) is only the start, several analysts opine. More ETFs will follow suit – and bring more money in, particularly from major investors.
There are a number of alternative funds in the market that allow for exposure to cryptocurrency without requiring investors to manage the digital assets themselves.
Perhaps the biggest benefit of cryptocurrency ETFs is that they provide exposure to the crypto without the additional expenses of ownership. Physical ownership of cryptocurrencies entails many additional expenses.
Investing in companies that hold Bitcoin on their balance sheet is another way to invest in cryptocurrencies without direct ownership.
For example, US-based MicroStrategy Inc. owned 114,042 Bitcoins purchased at an average price of $27,713 (Dh135,816) as of November 7, 2021. The company’s share price has jumped by roughly 460 per cent since it first announced the purchase in August 2020.
Electric carmaker Tesla Inc. commenced purchases of the cryptocurrency in 2021 and owns 42,902 bitcoins. Other publicly listed US companies with Bitcoin on their balance sheets are Galaxy Digital Holdings Ltd. and Square Inc.
NFTs: In 2021, NFTs rose to new heights and managed to draw mainstream attraction. In 2022, so many more crypto investors and enthusiasts want to be part of the NFT revolution.
Technically, you can use NFTs to distribute assets and validate authentication through the blockchain. It is a new paradigm where NFT rule and run on smart contracts.
Although the NFT market is still evolving, there are an increasing number of NFT-based projects in the market that are bound to gain more traction in 2022. While the concept of NFT dates back to 2015, now there are numerous opportunities and uses attached to the market.
Nevertheless, the NFT frenzy is far from over. In fact, crypto experts believe that the NFT revolution has just started and will lead to more blockchain adoption. After all, NFTs offer complete art ownership to people that ordinarily only wealthy individuals can possess.
With NFTs gaining acceptance in the fashion and gaming industries, it should expand into other industries. Hence, investing in NFTs next year is considered prudent if you want to own a rare collectible or if you intend to gain from it in the future.