Funds are betting on a consumer boom to compete with the ‘Roaring Twenties’

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Night economy before banning meetings of more than six people

Photographer: Anthony Devlin / Bloomberg

Photographer: Anthony Devlin / Bloomberg

Some of the world’s top money managers are betting on a post-pandemic spending boom that will propel real-world businesses as economies reopen and people return to their normal lives.

Investors in Aberdeen Standard Investments Inc. and GAM Investments at UBS Asset Management are increasingly investing money in companies where face-to-face interaction is the norm, such as travel companies, restaurants, offline shopping and “consumer experiences”.

“Many people believe that this will really lead to a new issue of the‘ roaring 1920s, ’” said Swetha Ramachandran, manager of GAM’s Luxury Brands equity fund, referring to growing views that post-pandemic spending would return It was then that euphoric consumers piled up in a wave of spending after World War I and the 1918 flu pandemic. “There will be a lot of peace” as people begin to socialize, he said. to say.

Higher performance a "leaving actions" accelerated in February

Investors began to accumulate in cyclical stocks benefiting from an economic rebound late last year after good news on the vaccine front, while withdrawing from high-tech technology stocks. Rotation accelerated as Treasury yields rose in mid-February. Now, with stimulus checks making their way into the United States, the beneficiary of half of the $ 2.9 trillion savings accumulated globally during the pandemic: consumer stocks achieve an even greater recovery.

U.S. retail sales rose the last time stimulus checks were handed out

Certainly no one is saying the pandemic is about to end. Europe is facing a slow deployment of vaccines, with renewals day-to-day restrictions in some countries, while the seven-day average of new Covid-19 cases in the United States has fired, showing state cases rising again and threatening a return to normal life. Digitization is here to stay: no retailer will return to a pure world of bricks and mortar.

But a short-term shift to consumer discretionary stocks in November, when “reopening” trade became fashionable, has room for recovery. A sub-indicator of global energy stocks is the best performance by sector since the end of October, up 53%, while the discretionary consumption index is only 17% higher.

Consumer discretionary actions have lagged behind in other reopening operations since November

In fact, the consumer discretionary stock indicator is expected to return to 17% over the next 12 months, according to data collected by Bloomberg, while the S&P 500 index is expected to increase by 12%. .

“People want to travel. They want to see a family they haven’t seen in a long time. They want to go out with friends, ”said Donny Kranson, European equity portfolio manager at Vontobel Asset Management.

Theme parks, airlines and even beer are back.

In terms of travel, the funds are for hotels suitable for stays such as Marriott International Inc. and home sharing firm Airbnb Inc., theme parks like Six Flags Entertainment Corp. and even the Chinese online travel agency Trip.com Group Ltd, listed in the United States. ., based on interviews with Miller Tabak + Co., Scottish Investment Trust and AGF Investments Inc.

Marriott has gained 11% this year so far, while Airbnb, Six Flags and Trip.com have advanced 19%, 41% and 11%, respectively. All have surpassed the S&P 500 in 2021.

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