Published on: Sunday, January 31, 2021
By: Assif Shameen
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FEW could have predicted the disruption wrought by the coronavirus in 2020. Indeed, when the virus first began to engulf the world last March, nobody was bold enough to forecast how the pandemic was about to become an accelerant for technologies and tech firms around the world.
Crises tend to have a transformative effect on societies. Covid-19 merely helped accelerate changes that were already in the making from the rise and rise of e-commerce platforms such as Amazon.com, grocery delivery services such as DoorDash as well as digital payment platforms such as Square’s Cash App, PayPal’s Venmo and digital or telehealth providers such as Teladoc Health.
Financial sector headlines are often dominated by banks and insurers. But there is one area that has emerged as a steady grower and dividend payer: financial exchanges.
Exchanges’ gains contrast against steep declines in the broader financials sector, where traditional banks in particular have grappled with ultra-low rates and a slowing global economy. Over the past several years, many exchange operators across the globe have seen strong share price rises, including Nasdaq, the London Stock Exchange Group and Hong Kong Exchanges and Clearing.
We think exchanges are solid companies that offer a number of attractive characteristics for both growth- and income-oriented portfolios. These businesses typically have high barriers to entry, high margins, low capital spending needs and strong free cash flows. They have returned plenty of capital to shareholders, and shares of most companies provide some yield. And compared to banks, exchanges have required less operating capital and have
FEW could have predicted the disruption wrought by the coronavirus in 2020. Indeed, when the virus first began to engulf the world last March, nobody was bold enough to forecast how the pandemic was about to become an accelerant for technologies and tech firms around the world.
Crises tend to have a transformative effect on societies. Covid-19 merely helped accelerate changes that were already in the making from the rise and rise of e-commerce platforms such as Amazon.com, grocery delivery services such as DoorDash as well as digital payment platforms such as Square’s Cash App, PayPal’s Venmo and digital or telehealth providers such as Teladoc Health.
A pandemic, recession, and tumultuous year in the markets yielded mixed results for our Roundtable members’ January 2020 picks. Large-caps and tech stocks were the year’s big winners.