Summary

• Invest in financial infrastructure stocks, the "picks and shovels" powering global market access.
• Rising demand from African investors for US market access fuels growth in infrastructure shares.
• Key investment opportunities include exchanges, payment networks, and financial data providers.
• These firms may offer resilient revenue from transaction fees, independent of market direction.

The Unseen Engine of Global Investing

Every so often, a story catches my eye that seems almost too obvious. Right now, it’s the tale of Nigerian investors piling into the US stock market. The headlines scream about their hunt for the next tech giant, a desperate flight from the volatile naira into the perceived safety of the dollar. It’s a classic gold rush narrative. But, as with any gold rush, I find myself less interested in the frantic prospectors and far more intrigued by the chaps selling the picks and shovels.

The Modern-Day Shovel Sellers

Let’s be honest, trying to pick the next winning stock is a fool’s game for most of us. For every person who backed a winner, a dozen others are nursing their wounds. The truly clever money, I’ve always thought, is made by betting on the infrastructure that everyone, winner or loser, has to use.

Think about it. Every time an investor in Lagos decides to buy a slice of Apple, that trade has to travel somewhere. It needs an exchange to execute it, a clearing house to settle it, and a data provider to supply the price in the first place. These are the toll roads of modern finance, and the traffic is only getting heavier.

Take a company like Nasdaq. It’s not just a fancy index, it’s a sprawling technology business that earns a fee on a staggering number of transactions. It doesn’t care if you’re buying or selling, or whether the stock you picked goes to the moon or to zero. It gets paid for facilitating the trade. The same goes for Intercontinental Exchange, the owner of the New York Stock Exchange. These firms are the landlords of the financial world, and rent is always due.

The Headache of Moving Money

Another rather unglamorous but vital piece of the puzzle is the simple act of moving money across borders. It sounds easy, but anyone who has tried to send funds internationally knows it can be a slow, expensive, and thoroughly irritating process. Traditional banks have been dining out on this inefficiency for decades.

This is where newer players like Remitly come in. They are building the digital pipelines that make funding an overseas brokerage account less of a chore. They specialise in cutting through the red tape and high fees, making the whole process smoother. For the growing wave of global investors, this service isn't a luxury, it's an absolute necessity. They are, in essence, greasing the wheels of global capital flow, and taking a small, sensible cut for their troubles.

A Pragmatic Bet on Globalisation

What I find so appealing about this approach is its inherent pragmatism. You are not betting on a single company’s success. Instead, you are betting on a global trend, the democratisation of investing. To me, this collection of companies represents a far more grounded approach to gaining US market exposure. It's a theme I've seen bundled together as Investment Infrastructure (US Market Access Tools), and the logic is rather compelling. It’s a wager on the entire system, not just one horse in the race.

Of course, no investment is without risk. Regulators could always throw a spanner in the works, a sharp global recession could dampen trading volumes, and the constant threat of technological disruption from the world of decentralised finance looms in the background. But these are long term concerns. For now, the existing infrastructure is king. The desire for currency diversification, especially in emerging markets, isn't a fleeting trend. It’s a fundamental shift in how people are thinking about preserving their wealth, and these companies are sitting right at the centre of it all.

Deep Dive

Market & Opportunity

• The core opportunity is in the financial infrastructure companies that enable global investing, often called a "picks and shovels" approach.
• A primary driver is the growing demand from investors in emerging markets, such as Nigeria, seeking US dollar exposure and diversification away from local currencies like the naira.
• These companies provide essential services like trade execution, payment processing, and data provision, which are in demand as cross-border investing grows.
• The business model is often defensive, as companies can collect fees on transactions and data regardless of whether US stocks rise or fall.

Key Companies

• Nasdaq OMX Group, Inc. (NDAQ): Operates one of the world's largest stock exchanges. It earns revenue from transaction fees, market data, and technology services that process trades for global investors.
• Intercontinental Exchange, Inc. (ICE): Operates the New York Stock Exchange and clearing houses that guarantee trade settlements. It also provides real-time price data services to trading platforms worldwide.
• Remitly Global, Inc. (RELY): Specialises in digital remittances and cross-border payments. Its technology facilitates the movement of funds to international brokerage accounts at a lower cost than traditional bank transfers.

Primary Risk Factors

• Regulatory changes could negatively impact cross-border capital flows.
• Economic downturns may lead to reduced trading volumes, affecting revenue.
• Increased competition from new fintech startups could create pressure on established players.
• Currency fluctuations are a risk, as these are US-listed companies, creating dollar exposure for international investors.
• Long-term technology disruption from blockchain and decentralised finance could eventually reduce demand for traditional infrastructure.

Growth Catalysts

• The structural trend of currency diversification is creating sustained demand from investors in emerging markets.
• The democratisation of finance, with investing now accessible via smartphone apps, is expanding the customer base.
• Falling barriers to cross-border investing are expected to continue, driving more global investment activity.
• The business model benefits from scalability, as infrastructure can handle growing transaction volumes.