Thematic Commentary – 31 October 2024

In today’s rapidly evolving market, investors need to stay on top of the latest trends and themes that fuel growth. In this monthly publication, we offer our market commentary across our themes, covering new opportunities and potential challenges. By providing a deeper understanding of our themes, we aim to help you make more informed investment decisions and achieve your investment goals.

Artificial Intelligence & Robotics

October brought positive developments for AI, robotics, and autonomous technology, signalling continued momentum in these transformative sectors. Tesla’s recent earnings report highlighted strong growth in its energy and automotive divisions, while CEO Elon Musk reaffirmed the company’s commitment to launching its long-awaited robotaxi service by 2025. This ambitious project aims to leverage Tesla’s advancements in FSD technology, paving the way for a fully autonomous ride-hailing service that could revolutionise urban mobility and create new revenue streams.

In aerospace, Rocket Lab achieved a significant milestone with the successful launch of multiple satellites for various clients, underscoring its reliability in small satellite deployment. The company also expanded its space systems division, focusing on the development of high-performance satellite components. These advancements position Rocket Lab as a key enabler of space-based data collection and communications, supporting AI-driven applications that rely on real-time data from low-Earth orbit.^1,2

Genomic Revolution

Despite continued challenges in market performance, October brought encouraging breakthroughs in the genomics field. Researchers at Stanford University revealed a pioneering CRISPR-based tool capable of editing genes with unprecedented precision, potentially accelerating the development of new therapies for genetic disorders. Illumina also shared advancements in its next-generation sequencing technology, with early trials suggesting a 20% improvement in detection rates for rare cancers, promising a major impact in early diagnosis and personalised treatment.

Additionally, Natera made strides in cancer diagnostics, announcing new clinical data supporting the use of its Signatera test to monitor treatment efficacy in colorectal cancer patients. The ability to track minimal residual disease and personalise treatment plans holds promise for improving patient outcomes and reducing unnecessary interventions. These innovations underscore the sector’s potential, showcasing genomics as a driving force in healthcare transformation. As these developments unfold, investor interest is likely to focus on the long-term growth prospects of transformative genomic therapies.^3,4,5

Innovation

October marked a shift in momentum for the ARK Innovation Fund (“ARKK”), contrasting with September’s positive performance. Despite a challenging market environment, driven by fluctuations in interest rate expectations and investor caution, ARKK continues to be positioned for long-term growth in disruptive technologies.
During the month, heightened volatility led to pullbacks in high-growth sectors, yet key areas like artificial intelligence showed resilience, with advancements continuing across these transformative fields. Companies in ARKK’s portfolio remain at the forefront of innovation, with many making strides in areas such as AI-driven automation and personalised medicine.

While near-term performance was impacted, October’s developments underscore ARK’s commitment to its core strategy of investing in revolutionary technology. As markets stabilise, the fund is well-positioned to capitalise on groundbreaking advancements that support long-term growth in high-impact sectors.⁶

Circular Economy Enablers

In October, sustainable packaging company DS Smith saw its share price soar, driven by strong results and positive developments from its merger partner, International Paper Co. Shares of International Paper rose after it announced third-quarter earnings that surpassed analyst forecasts with EPS of $0.44, around 73% higher than street estimates. This positive performance further boosted confidence in the ongoing merger with DS Smith, agreed upon as an all-share deal in April. Under this deal, DS Smith shareholders are set to receive 0.1285 shares in International Paper per DS Smith share, giving them a 33.7% stake in the newly combined entity. The substantial increase in International Paper’s stock, now trading at over $55, enhanced the value of the merger for DS Smith shareholders, driving DS Smith’s shares up to around 550p.

The merger, which is expected to close by the end of Q4 2024, aims to create a leading global sustainable packaging firm, integrating DS Smith’s substantial containerboard capacity with International Paper’s resources. This strategic combination is anticipated to deliver significant synergies and operational efficiencies across a global network, while underscoring the vitality of the circular economy investment theme, making it an increasingly attractive proposition for investors.⁷

Environmental Impact

October saw a notable development for one of our environmental impact companies, GE Vernova. The renewable energy equipment manufacturer is addressing the critical challenges of carbon emissions and the sustainable energy transition through advanced engineering solutions in power generation.

The company recently completed pioneering Front-End Engineering Design studies for three cogeneration power plants in Saudi Arabia. These plants operate with GE Vernova’s 7E and 7F gas turbines, which are high-efficiency, heavy-duty models specifically designed for versatile applications and adaptability in varying energy infrastructures. In these studies, GE Vernova assessed the feasibility of blending up to 32% hydrogen by volume with natural gas in the turbines, marking a significant step toward reducing the carbon footprint of traditional power generation. Additionally, the company evaluated Carbon Capture, Utilisation, and Sequestration systems for the plants, identifying that integrating an Exhaust Gas Recirculation system could cut the costs of carbon capture facilities by over 7% and reduce operational expenses by 6% annually.

By exploring hydrogen integration and carbon capture technologies, GE Vernova is not only advancing energy sustainability in Saudi Arabia but also contributing to broader global decarbonisation efforts, helping mitigate climate change impacts through practical, scalable solutions.⁸

Global Sustainable Infrastructure

In October, the European Investment Bank and the European American Chamber of Commerce New York launched the Transatlantic Resilient Infrastructure Alliance (“TRIA”), a partnership aimed at driving sustainable infrastructure investment in low- and middle-income countries. This alliance seeks to mobilise private sector funding to bridge infrastructure financing gaps and support sustainable development across the globe. It is envisioned as a vehicle to enhance climate resilience, particularly in regions vulnerable to environmental and economic instability.

By engaging private investors in projects aligned with sustainability goals, this collaboration highlights the growing global focus on creating infrastructure that drives economic growth whilst also balancing social and environmental objectives. TRIA’s focus encompasses the same sectors that fall within the scope of our sustainable infrastructure universe. For example, digital infrastructure enhances connectivity, climate and energy projects provide renewable energy and help solve energy security challenges, and transport investments support resilient infrastructure. Furthermore, efforts in healthcare strengthen systems in vulnerable areas, while education investments promote access to learning facilities and digital resources, fostering inclusive growth. This initiative joins a broader movement in sustainable infrastructure, addressing critical needs while encouraging environmental stewardship and economic resilience.⁹

Sustainable Future of Food

In October 2024, several promising initiatives highlighted the momentum in sustainable food systems globally.

The Food and Agriculture Organization of the United Nations (“FAO”) World Food Day on October 16 highlighted the need for safe, sustainable, and accessible food for all. Concurrently, the World Food Forum in Rome brought together experts and young innovators to discuss pathways for resilient and inclusive agrifood systems.

Local initiatives gained traction too. Atlanta saw a surge in urban farming projects, transforming green spaces and addressing food insecurity by providing fresh produce to communities. Uber Eats expanded into farmers’ markets in New York and Los Angeles, enabling customers to order seasonal, locally sourced produce, supporting local farmers and reducing the environmental impact of long-distance food transport.

In the UK, East Anglia’s fenland farmers embraced innovative water management techniques to restore peat soils, which helps curb carbon emissions. These developments reflect a global drive towards sustainable food systems that address environmental impact, local food access, and climate resilience whilst helping consumers to become more informed.^10,11,12

Cybersecurity & Data Privacy

In October 2024, there were several notable developments in the cybersecurity landscape.
The FBI and CISA issued warnings about foreign threat actors spreading disinformation to undermine trust in the upcoming U.S. election, in an exercise to raise awareness of election security vulnerabilities.

In the financial sector, the UK’s Financial Conduct Authority urged firms to bolster their preparedness against technology crises following the CrowdStrike outage during the summer that impacted millions globally. We also received a timely reminder that corporate breaches remain a major concern, as hacking group Dark X compromised US retailer Hot Topic, exposing the data of 350 million customers, which were later sold on underground forums. This breach reflects the increased sophistication of malware like “infostealers,” which facilitate large-scale data theft and pose a significant risk to corporations.

In regulatory news, the European Union advanced cybersecurity by adopting the Cyber Resilience Act. This legislation mandates that products with digital components, including connected home devices, meet cybersecurity standards before reaching consumers.
Collectively, these developments highlight the escalating challenges in cybersecurity across sectors and underscore the importance of continuous investment in robust cybersecurity measures in a rapidly digitising world.^13,14,15,16

Digital Payments Economy

In October 2024, the digital payments sector continued to embrace dynamic expansion and innovation. Affirm, a major U.S. buy now, pay later (“BNPL”) company, entered the UK market, aiming to compete with established BNPL providers like Klarna. In the Middle East, fintech firm Geidea partnered with tpay to broaden digital payment solutions across Saudi Arabia, Egypt, and the UAE, enhancing financial access in these growing markets. Meanwhile, Thailand’s 7-Eleven branches adopted a new scan-and-pay system, supporting transactions through multiple bank apps and boosting convenience for customers across just under 15,000 locations. McKinsey also published its 2024 Payments Report, noting that digital payment adoption continues to rise, with 92% of U.S. consumers now using digital payments, driven by in-app and in-store options.
These developments illustrate the rapid growth and consumer demand for digital payments, as businesses and consumers increasingly prefer seamless, flexible, and accessible payment methods. Investing in digital payments companies is increasingly attractive as these firms continue to innovate, expand globally, and respond to evolving consumer needs, positioning themselves as central players in the future of finance and retail.^17,18,19,20