UBS’s global equity focus list: stocks within financial technology

UBS analysts selected their top stocks from four technology subsectors – the following are from the “fin-tech” group.

“Many of [technology’s] subsectors are seen as a leading indicator of innovation and societal progress today, such as mobile tech’s role in helping emerging nations leapfrog the PC era, the rise of electric vehicles as a better environmental choice, and cloud tech that helps enterprises process big data efficiently,” said Hartmut Issel, head of Equity and Credit APAC and CIO at UBS.

Financial technology, or fin-tech, is one of the leading disruptors undergoing technological transformation and is expected to create consequential and enduring impact.

“Structural drivers such as rapid urbanization, digitalization trends around mobility, cloud, analytics, social media, emerging technologies, and stronger demand from millennials are supportive factors for continued fintech growth,” said Issel. “We expect fin-tech revenues to grow at a CAGR of 11.5% – from $285B in 2022 to $680B in 2030.”

The following stocks are attractive opportunities in the short- to medium-term. These are companies that would benefit from fiscal spending and tech innovations.

“We see industry leaders for 2030 emerging from these sectors,” said Issel. The following stocks are expected “to deliver superior earnings growth to the market, boosted by positive, durable structural trends supporting the theme.”

UBS also named the leading stocks in green tech, enabling tech, and health tech.

Fin-tech stocks:

• Bank Mandiri (OTCPK:PPERF) – “Indonesian banks, such as Bank Mandiri, are expected to benefit from the U.S. and domestic rate-cut cycle, which will help lower bond yields and the cost of funds, thereby improving net interest margins.”
• Bank of America (BAC) – “We consider Bank of America to be a well-managed, diversified universal bank and relatively well positioned to rebound from recent macroeconomic and pressures related to high interest rates.”
• Barclays (BCS) – “[Its] management recently highlighted it is working on revised financial targets and is committed to returning capital to shareholders,” analysts said. “Trading at the low end of the European banking sector, we do not think this is reflected in today’s valuation.”
• Goldman Sachs Group (GS) – The bank “should benefit from rate cuts in major economies…its valuation is attractive, based on a 2025 price-earnings multiple.”
• IntercontinentalExchange (ICE) – “The company can benefit from increased market volatility and trading volumes, which we think could remain elevated in this uncertain macro environment.”
• Intesa SanPaolo (OTCPK:ISNPY) – “We like Intesa’s diversified revenue mix, especially in a year when interest rates are declining, and fee growth is expected to continue to pick up.”
• MasterCard (MA) – “We think the next decade will reward investments in disruptive technology… [which should be] accelerated by the global rollout of 5G technology.”
• Societe Generale (OTCPK:SCGLF) – This “is one of the cheapest stocks in the sector (trading below 0.4x book value),” analysts said. “With rebased market expectations following last year’s investor day and self-help optionality, we think the stock looks attractive.”
• Standard Chartered (OTCPK:SCBFF) – The bank trades below the sector-average. “We think this is unjustified for a bank that is on a path to 12% return on tangible equity with the potential to buy back shares well above the >$5B target.”
• Vonovia (OTCPK:VONOY) – “We believe that declining interest rates could serve as a catalyst for the share price, as this would alleviate the pressure from expectations of higher future financing costs.”