Cloudy with a chance of price hikes: and ‘trendy’ investment themes to watch

By Jessica Amir, Market Strategist, Moomoo

Your recent Valentine’s Day may have experienced a ‘dampener’ thanks to higher than usual prices for our chocolate and wine pairings. The Australian wine industry faces a unique challenge with the resurgence of Downy mildew, a recurring threat that cyclically impacts grapevine health every 9-10 years.

This year’s expected decrease in wine production may lead to a scarcity of supply, which has driven up Australian wine prices. Investors keen on capitalising on this trend may consider companies like Treasury Wine Estates, positioned to benefit from potential price increases and shifts in consumer demand.

Similarly, the cocoa market is experiencing unprecedented price hikes due to supply disruptions in West Africa, the primary source of cocoa globally. Heavy rains and infectious diseases have significantly impacted cocoa production, leading to a surge in cocoa futures. Major chocolate brands like Mondelez and Hershey have responded with price hikes, signalling potential investment opportunities in this sector.

At a macro-level, several key themes are expected to drive market performance in 2024. You can expect conversations with your clients around several ‘trendy’ industries that are backed up with strong potential growth tailwinds, including:

Technology and AI: The rapid advancement of artificial intelligence (AI) is set to revolutionise various industries, from healthcare to finance. Companies like Nvidia, Microsoft, Alphabet, Apple, and Amazon are at the forefront of AI innovation, investing billions into infrastructure and product development. It’s also worth noting that Nvidia earns 27% of its revenue from Microsoft, and Meta. While orders from Amazon, and Alphabet account for 12% of its revenue. And we know these heavy weight tech giants are increasing their Nvidia orders in a bid to remain competitive.

If you agree that these themes offer potential opportunities, Moomoo has the ‘Investment Themes’ feature ready in the free-of-charge app.

Additional features, such as Industry Chain and Operating Data, are helpful for identifying more trading opportunities and saving both time and money, considering how difficult and scattered information is across various subscriptions required by other third-party websites. Needless to say, this includes the almost unreadable and the 10-K and 10-Q financial filings.

Electric Vehicles (EVs): The global shift towards hybrids and electric vehicles is accelerating, with China leading the pivot and NEV’s expected to hit 50% penetration this year. Companies like BYD, Tesla, Ford, Mercedes-Benz and VW, are leading the EV production charge, with sales expected to grow strongly in the coming years as much of the world aims to become carbon neutral by 2050. It worth keeping an eye on Geely, the brand behind Zeekr, China’s third most bought EV, as it’s set to launch in Australia later this year and recently just launched Zeekr in Europe. Geely is the company also behind Polestar, Volvo and Smart.

Healthcare Innovation: With increasing emphasis on healthcare and wellness, pharmaceutical companies like Eli Lilly, Novo Nordksh, Resmed and CSL are poised for growth. While we mustn’t forget company names like Insulet and Dexcom, advances in wearable technology and drug discovery present significant opportunities for investors in this sector. And we also know that healthcare garners defensive investment flows in times of economic slowdowns. So that’s something to consider as well, given GDP is expected to slow here in Australia and the US this year.

Staples: Despite market fluctuations, staples companies are often leant on as stalwarts given their consistent cashflows. Companies involved in food and groceries, wine and beer, and essential commodities will probably see an increase in portfolio allocation in 2024, as advisers prepare for a slowdown in discretionary spending.

Commodities and Dividend Payers: Commodities like copper, iron ore and gold are expected to benefit pressure on the US dollar and favourable shifts in demand and supply. Additionally, we need to consider that commodity companies will likely remain as some of the strongest dividend-paying companies due to their capital stability. Also consider that gold typically rallies when the Fed embarks in a cutting cycle. The last three times the Fed cut rates, gold rallied to new highs.

Investing wisely for the future: In the face of market volatility, adopting a disciplined investment approach is paramount. Let’s emphasise that quality companies with strong fundamentals, growing earnings and revenue, diverse revenue streams, and a track record of innovation can help mitigate risk and capitalise on long-term growth opportunities. Also consider, that risk management should be considered, such as take profits from winners, cutting losses and also keeping some cash at bay to pounce on investing opportunities.

As renowned investors like Warren Buffett and Charlie Munger have emphasised, investing for the long term requires rationality, patience, and a focus on intrinsic value. So allow time in your day for reading, forward-thinking, identifying emerging trends and strategically positioning portfolios. It will drastically help your clients achieve their long-term financial objectives and help you gain an edge.

Speaking of an edge, also consider Moomoo pays up to 6.8% p.a.* interest on uninvested cash for 180 days to new clients. And lastly, consider that Moomoo has further further reduced its fees for Australian and US trades. AU trades: AU$3 or 0.03% of transaction value – whichever is greater. And US trades cost US$0.99 ^per order.

This article is general information and does not consider the circumstances of any investor or constitute advice. No product mentioned in this article constitutes an offer or inducement to enter into any investment activity.

*T&Cs apply. Applicable for up to AUD$100,000 uninvested cash balance or equivalent. 3.75% p.a. base rate applies after 180-day. Rates may be subject to change. Moomoo is not a bank and the Cash Plus feature is not a bank deposit. ^Other pass-through fees and FX conversion costs apply.

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