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Why these global stocks are very well placed to benefit from post COVID secular trends

24 November 2020 Dr James Cooke, Head of Global Equities at Ashburton Investments

We have identified three major secular trends catalysed by the Coronavirus (COVID-19) - and have invested in the stocks that are expected to most benefit in the Ashburton Global Leaders Equity Fund. The fund invests in a concentrated portfolio of the world’s most prominent mega-cap companies.

The trends are:

1. The further rise e-commerce

How we are playing it: Alibaba Group, a Chinese multinational tech company specialising in e-commerce and often referred to as the “Chinese Amazon”.

The Coronavirus has accelerated the move to e-commerce, introducing many new consumers by necessity. Established consumers also increased their spending on online retailers for the sake of convenience and safety. Our belief is that the company will successfully navigate new Chinese antitrust guidelines by rapidly adapting and complying.

This month Alibaba set a new sales record for the annual Singles Day shopping event which is typically a 24-hour shopping event that takes place on 11 November in China. This year Alibaba began their huge discounts from 1 November.

The firm is expected to report revenues north of $100 billion for the financial year, up around 43% from last year. Its reported revenue for the quarter ended June 2020 was $21.7 billion.

2. Far greater concern for health and hygiene

How we are playing it: Reckitt Benckiser, an Anglo-Dutch multinational consumer goods company which sells well known household hygienic products such as Dettol, Finish and Harpic.

The firm is under new management and has successfully begun several internal self-help initiatives aimed at recovering market share and returning to growth.

Growth in its products have been accelerated by the demand for greater hygiene in response to the pandemic. We expect structurally higher levels of demand longer term as cleaning and sanitation habits become entrenched.

3. Greater demand for data

How we are playing it: Samsung Electronics, South Korean cell phone maker and technology conglomerate.

Samsung is the world’s largest supplier of semiconductor memory, where growth over the medium-longer term will be supported by new technologies such as 5G, autonomous systems, artificial intelligence, 3D sensors, data centres, cloud services and e-commerce.

The increase in speed that 5G offers could result in a shorter replacement cycle and increase in demand for new handsets. Around 60% of global smartphones have organic light-emitting diode (OLED) displays and Samsung dominates this market with a 90% market share. This means Samsung benefits from growth in smartphone sales as a whole and not just under its own brand.

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