Technology themes have been driving markets. Semiconductors were the first to benefit from the AI theme. Next was a second order effect, Utilities rallied as they benefit from the massive power demands of AI data centers. Broadening financial inclusion through mobile banking is another technology advancement that is improving the lives of people in developing countries.
The maps below show the progress in financial inclusion globally. In developing countries, 57% of adults made or received digital payments in 2021, up from 35% in 2014.1. This improvement is due to growing technology infrastructure. In the least developed nations, mobile money is filling in the void left by citizens not having access to traditional banking. The digital technology bridge connecting citizens in poorer countries to the global financial system has the potential to improve capital formation, increase trade, and can improve both the growth potential and standard of living in developing countries.
The rallies in semiconductors and utilities demonstrate how profitable technology trades can be for investors. Albeit a slower and longer-term trend, financial inclusion is another area of technological growth with the potential to have broad-based positive impacts on both the citizens of emerging markets countries and investors.