CM Trading shares the top industries to watch in 2021

From oil price hikes to bitcoin’s record rise, CM Trading highlights top market trends and industries

16 March 2021 - 07:04
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From oil’s huge recovery to bitcoin’s fresh all-time high, several sectors are not only recovering, but thriving. CM Trading chair Daniel Kibel shares the four top-performing industries to watch in 2021.

1. Oil: Huge price recovery

Oil producers were some of the hardest-hit businesses during the pandemic, with the oil price tumbling to an astonishing $11 at its lowest. Today, however, oil is gaining lost ground and trading above $60.

As global industries start to normalise and travel bans are lifted, oil prices could spike with the increased demand. Investors, however, will have to watch out as car manufactures and big companies shift towards renewable energy. Another red flag could be a false assumption that a return to mass global travel will occur sooner than is likely to happen.

“Oil prices can rise as vaccines roll out globally, and the world returns to ‘normal’ productivity. Oil is once again in demand as air travel and transport begin to return to their pre-Covid state. But, like most main commodities, it’s all related to dollar performance and the pitfalls of supply and demand,” says Kibel.

“We witnessed a huge oil rally, though perhaps we are still not out of the woods and complete recovery could be months away. The markets may have already priced in potentially unreasonable expectations, which may not occur, and this could lead to another drop in oil prices if demand doesn’t meet expectations.”

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2. Bitcoin: record high

Bitcoin traders are facing rapid fluctuations in price action in 2021; the digital currency hit highs above $53,000 to multi-month lows below $30,000. Bitcoin bulls appear determined to push for $55,000 and beyond. With optimistic on-chain data points and more top institutions legitimising the market, analysts estimate that bitcoin is likely to reach well above $60,000 in the near-term.  

“As bitcoin continues to climb, investors are eager to see just how high it can go. The biggest influx of investment comes as more mainstream companies such as MasterCard and Tesla use cryptocurrency, increasing the legitimacy of the market. Crypto is definitely the market to watch this year,” says Kibel.

3. E-commerce: online shopping boom

With traditional retailers closed and restaurants boarding up their doors, billions of consumers turned to e-commerce. Online shopping is booming, offsetting losses incurred from the lack of in-store purchases. A study by Rabobank International claims that online shopping will make up nearly 7% (up from 4.6%) of global grocery sales by the end of 2021.

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“Lockdown is a clear winner for Amazon. The online shopping boom was a natural outcome as people all over the world were forced to stay home and couldn’t visit their favourite brick-and-mortar stores. Amazon excels in providing high-quality items, great prices and a speedy service, which really helped its case,” says Kibel.

“Shopping has changed a lot due to Covid-19 and the convenience online shopping offers, it’s likely to remain equally successful beyond the pandemic. And while vaccines are being rolled out globally, we are still not completely out of the woods. So shopping from home still makes sense, and companies that are well positioned to meet the demand will soar.”

4. Video game industry: cashing in on gaming

The coronavirus pandemic offered gamers more time to enjoy their favourite games and hone their skills, while newcomers got the opportunity to see what the hobby is all about. Since 2020, the gaming industry has risen rapidly; its current market value is $138bn and growing, according to Analysts believe that at this rate it will reach $291.16bn by 2027.

“What was once seen as a minor market is now a multi-billion-dollar industry. As was the case with Microsoft, many gaming companies experienced unprecedented momentum during the pandemic, as more gamers spent time at home and new players joined the hobby. As the world becomes more connected digitally, the gaming industry is another one to watch in 2021,” says Kibel.

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My advice for SA traders? They need to just dive right into the action. However, they should not invest capital they can’t afford to lose. You don’t need to go all out either, because market opportunities are virtually limitless throughout the trading week, and with the tools provided, you can limit your exposure to risk.

Beginners can always make use of a demo account to practice until they are ready to trade with real money, and gradually increase their position size to boost their profit potential.

Aim for consistent profits over the long-term. It’s a marathon, not a sprint, and trading is a skill that requires both patience and practice for true success over the long-term.

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This article was paid for by CM Trading.