30 June 2023
|Index / Fund / Rate||Start of Year||Last week||This Week||% change YTD|
|Lunar BCI WW Flexible Fund||141.43||171.92||173.23||22.48%|
|JSE ALSI||73 049||74 403||75 961||3.99%|
|NASDAQ Composite||10 467||13 493||13 788||31.73%|
|S&P 500||3 840||4 348||4 450||15.90%|
|Prime Lending Rate||10,50%||11.75%||11.75%||11.90%|
|Brent Crude ($’barrel)||85,95||74.45||75.16||-12.55%|
Weekly Stocktake with Danyaal
Millennials Stamp their Economic Authority
At Lunar Capital, we look at local and global macro themes that we believe will unfold over the long term. From these themes, we discuss which industries stand to benefit from these trends. We ask ourselves if these are industries we understand and like. If we do, we then look for the market leaders and/or disruptors in the industry and consider whether we think they are worth investing in. Below is a breakdown of one of our themes.
Millennials Stamp their Economic Authority
Millennials, born between 1982 and 1994, are widely recognized as the first generation to grow up fully immersed in digital technology. With the advent of the internet and widespread phone usage, many individuals in this cohort were born into a world where these technologies were already prevalent. As a result, millennials have developed a strong inclination towards instant responses and gratification, a phenomenon often referred to as the “Amazonification effect.” They have become accustomed to the convenience of ordering goods with a simple click and receiving it within a day. Similarly, millennials gained access to instant and affordable connectivity with others early in their lives. Furthermore, this generation exhibits heightened concerns about environmental sustainability and quality of life, as they prioritize decisions that impact their own well-being.
As millennials increasingly move into the mainstream, we anticipate a continued increase in the demand for online services. Given their emphasis on quality of life, we also expect further growth in the demand for experiential offerings. Additionally, as millennials transition into more settled lifestyles, they will wield greater economic power and exert a substantial influence on the overall economy. This generation could also play a pivotal role in shaping consumer behaviour, determining the extent of online shopping, expenditure on experiences, and influencing housing market demands.
Among the sectors we believe are poised to benefit from the increasing prominence of millennials in the economy are e-commerce, social networks, travel, lifestyle, innovative financial services, and online education. For instance, within the lifestyle sector, we would explore opportunities in companies specializing in athleisure wear. As millennials’ disposable income rises, a significant portion of them has demonstrated a preference for buying high-quality athletic apparel. Notably, companies like Nike and Lululemon have already capitalized on this trend. In the case of Lululemon, we see potential for further growth due to their focused and high-quality product range. When they release a new product, it tends to have a significant impact on their business. If the product sells well – the overall company does really well. However, the reverse is also true.
We use different investment themes to find businesses that we believe will succeed in the long term. The increasing economic authority of millennials is just one of these themes that helps us identify companies that we would like to own.
Lululemon and Amazon are held in the Lunar BCI Worldwide Flexible fund. They are also held by the Lunar Capital Offshore Portfolio Clients.
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This roundup is prepared for the clients of Lunar Capital (Pty) Ltd. This roundup does not constitute financial advice and is generated for information purposes only.