Saxo Bank Introduces Equity Theme Basket Focusing on Payments Industry

Saxo Bank recently announced that it has introduced new equity theme basket focusing on the payments industry consisting of 25 old and new companies of high quality.

Out of the 25 companies in the basket, 11 companies have listed publicly within the past five years. The reason why AfterPay is not in the list is that Saxo expects the acquisition from Square to be approved by all regulators.

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The key risks for investors in the payments industry are foremost high valuations which require the newer payment companies such as Square and Adyen to constantly perform and deliver high growth rates. Increased regulation of the payment industry is also likely given the accounting scandal and fraud at Wirecard and the Greensill collapse which has shocked the supply chain finance industry.

Fraud committed by consumers and merchants is also a key risk for payment companies, and cyber attacks on payment networks are probably the ultimate tail-risk for these companies. It has the potential to completely devastate a payment company. Expansion to emerging markets also come with higher credit and fraud risk.

Finally, digital currencies issued by central banks or privately issued cryptocurrencies have the potential to disrupt the entire payment industry once again.

Saxo has been regularly expanding its lineup of equity theme baskets. In July, the company launched a basket on 3D printing companies. Also in June, Saxo launched its 15th equity basket focusing on the global logistics industry​.