Vijay Valecha, Special to Exbulletin , Dated 05 Oct 2020
The total number of deaths from Covid-19 may have passed one million and many countries face a second lockdown, but that hasn’t stopped global stock prices from soaring to new highs, led by the United States.
All of this stimulus from the central bank is doing its job of supporting asset prices, but it leaves investors in a tight spot. Pessimists will be reluctant to invest now, fearing that equity markets are only supported by near zero interest rates and money printing, and a second crash could be imminent.
Optimists will actively seek buying opportunities, hoping to look for the right deals before we get a vaccine and the recovery begins.
If you’re looking to invest $ 10,000 in the next quarter, here are three investing ideas to consider right now. The former looks beyond American tech giants such as Apple and Amazon to the next wave of digital winners, the latter is a bet that Asian countries such as Singapore and China will spearhead the recovery. post-coronavirus, while the third is an outright bet, as he relies on British Prime Minister Boris Johnson to avoid a combined Brexit and Covid-19 merger this winter.
American digital companies
U.S. equity markets are booming, with the S&P 500 up 50 percent from its March low, as investors weather the pandemic by focusing on tech and healthcare stocks.
While streaming service Netflix and gaming tech company Nvidia have benefited from the lockdown with a captive audience at home, Mr. Valecha says other potential beneficiaries have been overlooked.
Content Delivery Networks (CDNs) speed up download times for videos, music, games, and movies by running a global network of web servers that store digital content locally and provide opportunities for investors brave enough to buy. individual actions.
It also chooses CDN provider Fastly, a larger operator with a market capitalization of $ 9.55 billion, whose services are used by Amazon, Pinterest, TikTok and Etsy. Its share price has more than tripled in the past year, rising 319%, according to Bloomberg. These are risky games and there is no guarantee that this manic rate of growth will continue. It could go in the opposite direction.
He says less than one in 10 pet owners in the United States have insurance and with nearly 85 million households owning pets, the potential for growth is huge, he says.
Trupanion has a market cap of $ 2.77 billion and is up 212% year-over-year, according to Bloomberg figures. Again, however, this type of growth is difficult to maintain.
The coronavirus may have first appeared in China, but Asia has weathered the pandemic better than most.
South Korea contained the virus, while swift action from Singapore and Taiwan avoided a full lockdown.
This places the region in a position of strength as Europe and the United States struggle to contain the epidemic without destroying their economies.
Luca Paolini, chief strategist at Pictet Asset Management, expects emerging Asian equities to outperform, with China to be the star. Asia’s relative strength should play out in tech stocks, where the region looks poised to take the lead from the United States.
Mr Paolini adds: Chinese technology, consumer staples and healthcare companies are probably the best performing sectors because they are relatively well capitalized and able to generate cash.
Mark Shirreff Matthews, Asia research manager at Julius Baer, says Chinese consumer sentiment is on the rise again. China is psychologically well advanced compared to the rest of the world, with the coronavirus being almost completely eradicated. More people wear masks than those who don’t, and hand shaking is the norm again.
The country began its eight-day Golden Week vacation on October 1, and Matthews said it will boost travel agents, airports, airlines and domestic hotels. To invest in a more sustainable recovery in Chinese consumption, investors should focus on durable goods, high-end commodities, restaurants and movies.
Exchange-traded funds such as iShares MSCI China A ETF, SPDR S&P China ETF, Global X MSCI China Consumer Disc ETF or iShares MSCI Hong Kong ETF could help you play a Chinese rebound.
Brexit Great Britain
Global investors have avoided the UK stock market since the EU referendum in June 2016. It has cast a shadow over the economy for four and a half years, and it continued into September when UK Prime Minister Boris Johnson suddenly threatened to rewrite the Brexit Withdrawal Agreement.
The EU responded with legal threats, bringing down both the UK stock market and the pound sterling, as fears grew that Britain would part ways with its biggest trading partner without a deal on December 31.
Rupert Thompson, chief investment officer at UK wealth adviser Kingswood, says the time has come to crack as any deal must be largely finalized by the end of October, but the outlook has suddenly brightened. The prospects for a deal are rather better than a few weeks ago.
He says Mr Johnson has strong incentives to avoid a no-deal Brexit. With significant restrictions from Covid-19 and the government already under attack for incompetence, it may not want to take the flack to inflict even more chaos on the economy.
British stocks had another rotten year, underperforming global markets by 24%, Thompson said. The UK’s weight in the global stock index has now been reduced to 4%.
Along with Brexit and Covid-19, the benchmark FTSE 100 has been hit by its abundant exposure to oil and gas stocks and the banking sector, both of which have been hit by the pandemic.
Darius McDermott, managing director of Chelsea Financial Services, says global investors are not the only ones fleeing the UK. Everyone seems to hate British stocks, even us Brits.
In 2005, UK investors held 39 percent of their assets in UK equity funds. Today, that figure is only 14%.
This means that the UK stock market is cheap, compared to more successful competitors, and could offer a buying opportunity. Mr McDermott says: If we get a positive Brexit deal and a Covid vaccine, we could see a rebound in this unloved stock market.
The easiest way to access a recovery in the UK stock market would be to buy a simple and inexpensive tracker such as the iShares Core FTSE 100 UCITS ETF, Vanguard FTSE 250 UCITS ETF, which invests in countries of size average or the SPDR FTSE UK All -Share UCITS ETF to capture the full index of around 900 listed stocks.
The value of your holdings would be increased if the pound bounced off a deal, but remember that has not yet been done. Expect last minute twists, turns and political protests. Investing in the UK could go both ways right now.Source : Exbulletin