What’s HOT and What’s NOT
As we enter 2025, investors are navigating a dynamic financial landscape shaped by technological advancements, sustainability imperatives, and shifting market sentiments. Here’s our overview of the sectors attracting investment and those facing caution.
Sectors Attracting Investment
Artificial Intelligence (AI) and Technology
AI continues to captivate investors, with significant capital inflows into AI startups and technologies. In 2024, U.S. venture capital funding surged by nearly 30% year-on-year to a record $209 billion, with AI companies securing 46.4% of this total, a substantial increase from less than 10% a decade ago.
Renewable Energy and Green Technology
Despite recent challenges, the renewable energy sector remains a focal point for investors prioritizing sustainability. Global venture investment in climate tech declined to $30 billion in 2024 from a peak of $48 billion in 2021. However, sectors like energy storage and AI-powered data centres experienced increased investment, indicating targeted interest within the green tech space.
Healthcare and Biotechnology
Advancements in gene editing, telemedicine, and wearable health technologies are attracting investor interest. The global biotechnology market is projected to grow at a compound annual growth rate (CAGR) of approximately 15% from 2025 onwards, driven by innovations in personalized medicine and healthcare delivery.
Sectors Facing Investor Caution
Traditional Energy and Fossil Fuels
There’s a discernible shift away from fossil fuel investments due to environmental concerns and the global transition towards cleaner energy sources. Investments in renewable energy have outperformed fossil fuel investments, with green energy stocks showing a 35% return in 2024 compared to 15% from traditional energy stocks.
UK Equities
UK-focused funds have experienced significant outflows, indicating waning investor confidence in the region’s market performance. UK funds witnessed a net withdrawal of £9.6 billion, contrasting with global equity fund inflows of £27.2 billion. This marks the ninth consecutive year of net outflows for UK funds.
Solar Energy Sector
Despite growth in solar electricity generation, the sector has faced financial challenges, leading to investor apprehension. Global solar electricity generation rose significantly in 2024; however, major solar firms experienced substantial share price declines, and related exchange-traded funds suffered losses.
It’s inspiring to see industry leaders taking bold, practical steps toward a more sustainable future. A 55% reduction in methane emissions and $100 billion invested in low-carbon technologies are achievements worth celebrating!
