Do you want the decline in European markets? In the inbox before opening, every day. Sign up here.
A year after Covid-19 rearranged world markets, causing a brutal sale of many stocks and creating new ones, the prospect of vaccine-led thinking is shifting the current of the main pandemic retardants.
The reboundes in stocks that were hardest hit during the early days of the crisis have helped stock benchmarks around the world reach all-time highs. Like European tour operators TUI AG and slow owner of USA Simon Property Group Inc. is among those who have concentrated most strongly.
“There is a great opportunity in these retarders,” said Hani Redha, portfolio manager at PineBridge Investments, referring to the stocks of airlines, cruise operators and hotels. “We’re on the more bullish side that there will be a lot more normalcy coming back sooner than you think.”
Growing optimism among investors about the end of the months of blockades and travel restrictions can also be seen in the recent low yield of those stocks that were one of the biggest winners of the pandemic. The tastes of Zoom Video Communications Inc. and Germany Delivery Hero SE, which shot up as the coronavirus gained strength and changed everyone’s way of life, is now a long way from its highest ratings.
Where the populations most exposed to the pandemic here come from depends, of course, on the virus and the speed and effectiveness of vaccine launches. Below are the possibilities that are broken down by sectors.
Actions to stay at home
The hottest trade of 2020 has lost some of its brilliance in recent months as investors pursue higher valuations and higher growth expectations in other industries. Shares of companies like Zoom, Netflix Inc. i Amazon.com Inc. has lagged behind the broader market since late October.
Wall Street estimates have not changed for Zoom for months and the stock is trading at about 27% below its 2020 high. Amazon has been aligned since September, with sales and profit news on the rise causing shrugs by analysts.
There are similarities in Europe. Delivery Hero is about 16% below the January peak, while that of France Ubisoft Entertainment SA and UK online supermarket Ocado Group Plc has retreated after the results did not provide new catalysts.
But some of the region’s pandemic winners have continued to thrive, suggesting a more selective approach among investors. Firm payment Adyen NV, which rose more than 160% in 2020, and Swedish online casino operator Evolution Gaming Group AB, which nearly tripled last year, has continued to hit records almost daily. German parcel company HelloFresh SE is another that has increased earnings in 2021.
From the worst to the first: 2020‘s Nikkei The losers of shares are in 2021‘s Winners
“We will never go back to where we were pre-pandemics,” said Alasdair McKinnon, senior manager of the Scottish Investment Trust, citing those that have flourished as a result of work from home, online shopping and demand for equipment. home entertainment. . “But I just think we’ve seen the absolute best conditions you could get for these companies.”
Retailers
Investors are betting on increased demand from online shoppers to survive the pandemic, with only digital retailers Etsy Inc. i EBay Inc. in the US and Asos Plc in the UK continues to surpass 2021.
But according to Bloomberg Intelligence analyst Poonam Goyal, clothing retailers like them Urban Outfitters Inc. and department stores such as Kohl’s Corp. it has a chance to regain lost market share from e-commerce as store-based traffic begins to recover by the end of the year. Both stocks have gained more than 18% this year, beating the S&P 500 index, while European stocks Hennes & Mauritz AB have increased by 9.9% to contribute to a maximum of about 12 months.
Boom online
US and European e-commerce stocks continue to boost in 2021
Source: Bloomberg
Reduced competition from physical outlets after permanently closing some stores during the pandemic is likely to benefit brands such as Primark, of Associated British Foods Plc, said Alan Custis, UK head of equity at Lazard Asset Management LLC. He hopes consumers will want to go out to stores after easing the lock restrictions.
“People are still enjoying the real shopping experience, despite the fact that we know the network has really grown through this pandemic,” Custis said.
Travel and leisure
The travel and leisure sector has taken place again, but many groups such as airlines and movie chains remain well below pre-pandemic levels.
One of the best performers has been Live Nation Entertainment, which has gained more than 80% since the end of October and is trading at a record high. Investors bet that the accumulated demand will lead to an increase in revenue and profits, although some analysts have warned that valuations could be too frothy.
In Europe, optimism about the resumption of travel and tourism has helped the participation of InterContinental Hotels Group Plc and economic airline Ryanair Holdings Plc recovers all its pandemic losses. Morgan Stanley analysts this week raised price targets for InterContinental among other European leisure stocks, noting the accumulated demand for travel.
Still, Rory Alexander, equities manager at M&G Investments in the UK, sees so-called staycations remaining in vogue for the next two years, with consumers shifting to domestic leisure activities such as bowling. actions of UK pub operators have already “intensified” and Alexander sees a high level of optimism already embedded in some travel and leisure stocks.
Real state
In the US, data center owners like it Equinix Inc. i Digital Realty Trust Inc. were the shares he owned last year as the demand for computing power increased. This script has changed in recent months, with investors being turned into reduced REITs and exposed to retail. Mall owners Simon Property i Kimco Realty Corp. has gained more than 70% since late October.
It is still a challenge in Europe. Analysts said recent results of Unibail-Rodamco-Westfield, the largest mall owner in the region, contained no positive. Company Klepierre SA said this week that current blockade measures affecting 60% of its stores will continue reached its cash flow this year, though it indicated that restrictions on buyers could ease after March. Both actions have expanded the 2020 declines this year.
Office owners have also suffered because their properties remain empty, although rental revenue has held up better than their retail-focused counterparts and there remains an expectation among analysts that stocks like Office of Alstria REIT i Covivio SA will recover when the economies recover.
This does not eliminate the existential threat posed by a higher proportion of people working from home. Developers with newer buildings that can be adapted to meet the changing demands of employees and employees are likely to thrive.
– With the assistance of Sam Unsted and Lisa Pham