Despite the economic crisis produced by the coronavirus pandemic, the start of vaccination campaigns is driving optimism in the stock markets. In recent months the market has experienced an increase in inflation and “this trend is likely to continue in 2021”, says Olgerd Eichler, manager of the MainFirst Germany Fund and the MainFirst Top European Ideas Fund.
In this sense, central banks around the world have begun to flood markets with liquidity, which generates the momentum of a "relative recovery", assures the manager. But this initiative has not only aroused the interest of banks, the main markets around the world are already discounting the vaccine effect.
A clear are the main markets. Wall Street has set new all-time highs this week with the Nasdaq as one of the most bullish, it has surpassed 13,500 points for the first time thanks to investment in technology. Meanwhile, the Ibex 35, despite the falls this week, reached 8,400 points in January, a level I haven't seen since the beginning of March.
The coronavirus affected a large number of sectors, however, to hospitality and tourism has been like a stake, leading companies to a great crisis. The losses amount to more than 30,000 million euros, according to the report prepared by Bain & Company and EY.
Due to the hope generated by the coronavirus vaccine, the perception of many companies in the capital market is experiencing a paradigm shift. This generates a rapid recovery of the shares of the sectors most affected by the pandemic, especially banking, entertainment and tourism. "For them, the availability of a vaccine opens the door to a new kind of normalcy," says Eichler.
EUROPE: THE NEW FAVORITE
The relief generated with the start of the vaccination campaigns was also reflected in the European indices, which registered strong increases in the last months of 2020. Eichler argues that Europe has more potential for recovery than the United States.
Europe has more potential for recovery than the United States
In this sense, the countries that leading this recovery were France, Spain and Italy, which amounted to two digits. Likewise, European stock markets, whose companies tend to be based on US values, have become a solid opportunity to take advantage of the economic recovery.
The stock manager assures that this year there will be a reorganization of the market, where Europe will be crowned the new favorite to invest in 2021. This development is due to the momentum of investors, which is returning to the stock markets.
So far, the banking, oil and gas sectors have benefited the most, while household goods and food manufacturers have made only modest profits. According to Eichler the gap between the management of investment funds 'value' and 'growth' should "close even more".
CYCLICAL ACTIONS RESURRIVE
The main drivers of the market are 'value' stocks and more cyclical sectors, which investors had been ignoring for a long time. Leaving aside the typical coronavirus winners.
In this sense, as the economic recovery progresses, other aspects of the respective actions are valued. An example is the car rental company Sixt that, although its demand is not the same as before the coronavirus, "will very quickly return to the right path" and will achieve "profitable growth as soon as conditions improve from the real world ”thanks to its capitalization and rigorous cost management, assures the fund manager.