The S&P Kensho New Economy Indices seek to track the industries and innovation of the Fourth Industrial Revolution
TOP THREE FROM ACROSS THE NEW ECONOMIES
Drones (11.5%): 2022 kicked off with a challenging start for technology and innovation stocks under pressure from inflation, rising rates and concerns over a potential recession. The outbreak of the Russia-Ukraine conflict on Feb. 24, 2022, significantly affected the global economy. Drones, one of the underperforming subsectors in the previous quarter, took off with accelerated demand for U.S. unmanned aircrafts from the battlefield. Within the first three days of the conflict, this subsector gained 14.1%. In mid-March, the U.S. government announced USD 800 million in military support to Ukraine, including 100 Switchblade drones, further fueling the subsector’s performance. AeroVironment, the manufacturer of Switchblade Drones, and airborne electronic systems providers such as Elbit Systems and Rada Electronic Industries were the other leading contributors to this outperformance.
Clean Energy (7.9%): The Russia-Ukraine war magnified the risk of the world’s dependence on fossil fuels, potentially speeding up the transition to alternative energy sources such as solar and wind. On March 8, 2022, U.S. President Biden signed an executive order to ban the import of Russian oil and gas, promptly followed by similar orders from European allies. Clean energy stocks benefited from the rising prices of traditional energy sources—the price of WTI crude oil increased by USD 30.40 per barrel (or 40.2%) during the first quarter. Companhia Paranaense de Energia (Copel), Centrais Elétricas Brasileiras and Enbridge also saw notable gains during this period.
Space (3.6%): Mixed news from various constituent stocks sent the Space subsector Q1 performance on a turbulent ride. On one hand, company-specific events such as the failure of Astra’s rocket launch and doubt regarding Virgin Galatic’s profitability over its new ticket sale of space tours dragged the space subsector down. On the other hand, the Russia-Ukraine war helped to proliferate the role of satellites and airbornes in modern national defense. Maxar Technologies, which provides high-resolution satellite images over a battlefield, was the largest contributor and the top performer within the Space subsector.
