Hot Sectors of 2021: Tech, e-commerce, EV manufacturers, Consumer Staples, Energy
Singapore’s economy experienced drastic disruptions in the last few months, largely courtesy of the coronavirus pandemic. Many economic segments were affected, but the period also provided a positive growth trajectory for some segments while overall painting a good picture of which segments are healthier than others.
The post-pandemic economic recovery period also seems to be favoring some industries more than others, especially in the short-term. Understanding which segments will perform exceptionally well requires a wider set of factors to consider. Here is a list of the hot sectors that we think are poised to top the list, which may also offer investment insights.
The global demand for electric vehicles is currently gaining traction at an exponential rate, and that demand has also crossed paths with strict emission standards. That crossing has inevitably sealed the fate for the internal combustion engine’s future, thus shifting the focus to EV production. Some countries plan to phase out ICE vehicles by 2030, and others soon after that.
There is no doubt that EVs are the future, and so demand is expected to continue increasing. Many automotive manufacturers across the world are embracing the EV future. Advanced battery technology such as solid-state batteries also promises to bolster the electric future further.
Singapore will not be watching from the sidelines as the industry transitions. It will play an active role in the electrification of the automotive industry courtesy of South Korean automotive brand Hyundai Motors, setting up a research and development centre in the city-state. Construction completion is set for 2022, and it will be Singapore’s first automotive manufacturing facility whose annual production capacity is expected to reach 30,000 vehicles by 2025.
Singapore does not expect to sell anymore ICE-powered vehicles by 2030, and it plans to have no ICE vehicles on the roads as soon as 2040. Hyundai plans to become one of the largest EV manufacturers globally, and Singapore will be a key piece of the puzzle in its grand scheme. (Source: Argus Media).
Singapore is one of the leading e-commerce markets in Asia and thanks to numerous factors, including the government’s commitment to developing a digital economy, tech-savvy citizens, and a robust ICT structure with fast internet. The pandemic had the majority of the population confined in their homes. However, those in the essential segment were still allowed to continue operating their business with proper measures. (Source: Trade).
E-commerce service providers were among the essential workforce that continued working to make sure people could still shop and receive goods from the comfort of their homes. It was the opportunity that e-commerce needed to gain ground over traditional brick and mortar shopping. Many people rely on online shopping, and many of them will likely stick to it for its convenience.
Singapore’s pace of e-commerce growth aligns with the global e-commerce growth. Shoppers in Singapore can easily access products from the U.S or China in a few days. Some of the other positive implications include job creation and more wealth creation.
It helps that Singapore has all the right infrastructure to support online commerce. For example, there are multiple fulfillment services such as SP eCommerce, WhiteBox, Allsome, Ezycommerce, iStoreiSend, and uParcel. These services provide end-to-end e-commerce services. The city-state is strategically located in the South East Asia region, served by 130 airlines that connect to 400 cities. The same applies to the country’s maritime operations, which connect to 600 ports in 120 countries. Singapore, therefore, has a robust infrastructure to support e-commerce.
Mobile technology is a key factor supporting e-commerce, entertainment, and social media. Smartphones are now fast and reliable enough to be used for online shopping, online communications, and entertainment purposes. Singaporeans are expected to continue expanding their digital footprint as mobile technology continues to advance.
The internet is also another technology that has made notable contributions to Singapore’s social and corporate landscape. Internet penetration in the city-state is at 82.86% in 2021, according to Statistica. Infocomm and Communication Technology (ICT) is the biggest technology contributor in Singapore as far as technology is concerned. ICT has helped many technology companies in e-commerce, manufacturing, finance, and services, among others.
Singapore has a high level of technology adoption in various facets. For example, the city-state was the first to launch an autonomous taxi service. The tech adoption extends to areas such as the police force, which has powerful search drones that look like they come from a sci-fi movie.
The city has smart lights with sensors that detect environmental changes such as rainfall, humidity, and temperature. They also have noise sensors to detect loud noises such as screams, allowing police to respond quickly. Singaporeans have the highest rate of smart living technology adoption. Smart systems have benefits such as optimal utilities management, resulting in lower utility bills and systems that can monitor adults’ wellbeing. (Source: IoT For ALL).
It is arguably the most important industrial segment, especially for a high-tech country such as Singapore. The city-state generates roughly 95% of its electricity from natural gas, which happens to be the cleanest fossil fuel source. However, the country is investing heavily in other energy sources, particularly renewable sources such as solar power.
To put things into perspective, Singapore set out to reach 350-megawatt solar power production capacity by 2020, and it managed to achieve that goal. The next step will be to ramp up solar power to 2 gigawatts by 2030. The government is also investing heavily in energy storage systems. This heavy focus on solar is a nod to the global push towards renewable energy.
It continues to be one of the best performing segments in Singapore’s economy. Consumer staples was the second-best performing economic segment in Singapore in Q1 2019. 20 of the top consumer staples companies in the segment have a market cap of more than S$80 billion, indicating a strong growth area.
Singapore has roughly 5.7 million citizens, and the average monthly salary is $5,783. Accessing basic staple products such as food, medicine, and other household products daily is important for residents, and it also translates to consistent revenue streams for companies in the segment. (Source: Facebook).