Sectors most affected by the Covid pandemic and the outlook


It is a tricky time for investors at the moment to say the least. After one of the longest bull markets in history, the pandemic crisis caused huge disruption with sweeping share movements affecting individual stocks and sectors alike.

There were some significant losers, including a swathe of high street closures, but also some dramatic gainers as the impact of Covic shook all parts of the marketplace and workforce.

The biggest risers

In terms of the biggest risers, let's look at the data from the FTSE-All Share from January to March 2020 as the first lockdown kicked in.

Suppliers of the basic commodities and services fared best in the markets as society slipped down Maslow's Hierarchy of Needs towards the essentials. The world retreated inwards and once the supply chain could be secured the market reacted accordingly.

Top of the sectors according to the IFS (Institute for Fiscal Studies) were the Food & Drink retailers, followed by Personal Goods, Medicines, Gas & Water and Mobile Telecommunications. 

The biggest fallers

Again, when we look at the fallers during the first lockdown, the sectors most affected are logical. Fossil Fuels & Distribution topped the list of FTSE-All Share fallers, with Tourism & Leisure, Automative & Parts, Fossil Fuel Producers and Insurance most affected.

Logical as people travel less which uses less fuel and we see an associated rise in insurance claims and risk calculations from the pandemic

What's next?

Given the disruption we've seen, it's a brave investor that tries to second guess the market at the moment. 

We could at least assume that those sectors most affected were likely to rebound back towards their old levels provided they could stay afloat in the meantime. And indeed, those sectors who most benefited from the move indoors were likely to dip again, but perhaps not back to previous levels as society reset with working from home and more local tourism remaining for the medium term at least. 

And likewise the pharmaceutical firms with the most effective and best distributed vaccines had strong prospects for the future even if some of them were initially working at cost. 

Once some of the emotion has retreated from the market, which is likely to remain twitchy throughout 2021, then again we have to look at fundamentals, growth prospect and longer term trends, while being conscious that mutations in the virus may cause further bumps along the road.

Comments

Post a Comment

Popular posts from this blog

Explaining Gilt-edged securities (shortened to gilts)

Gilt-edged securities, also known as gilts, are debt securities issued by the government of the United Kingdom.   They are called gilt-edged securities because they are considered to be among the highest quality and most secure investments available, with a long history of low default rates and stable returns. Gilts are issued in a range of maturities, from short-term bills with a maturity of less than one year, to long-term bonds with a maturity of over 25 years. They pay a fixed rate of interest, known as the coupon, which is paid to investors on a regular basis, typically semi-annually. The principal amount of the gilt is repaid to the investor at the end of the term of the gilt. Gilts are issued by the UK Debt Management Office (DMO), which is an agency of the UK government responsible for managing the government's debt. The DMO issues gilts on behalf of the government to finance its borrowing requirements, and sets the terms and conditions of the gilts, including the coupon ra...
Read more

What is Financial Intermediation Services Indirectly Measured (FISIM)?

Financial intermediation services indirectly measured, or FISIM, refers to the value of the services provided by financial intermediaries, such as banks and other financial institutions, in facilitating transactions between borrowers and lenders.  FISIM is typically calculated as the difference between the interest rates paid by borrowers and the interest rates received by lenders, minus the costs incurred by the financial intermediaries in providing these services. FISIM is an important concept in national accounts and macroeconomic analysis, as it helps to capture the economic value of the services provided by the financial sector. It is typically included in the measurement of gross domestic product (GDP) and other macroeconomic indicators, as it reflects the contribution of the financial sector to economic activity. There are several ways in which financial intermediaries provide value to the economy through their intermediation services. These include: Information gathering an...
Read more

Best and worst performing UK FTSE All-Share sectors in 2020

Image
What a year 2020 was for investing.  Record-breaking lows, recoveries, logic, panic and confusion all thrown together with fortunes made and lost. A pandemic, Brexit and a sometimes chaotic US Election made for a perfect storm in instability. But now the dust is settling which sectors fared best and worst and more importantly why?  Let's look at the UK in this article. Data from IG  from H1 2021 (Jan-July) shows the disparity between sectors in the FTSE All-Share: Sector                                    Average share price return Healthcare                          +5.1% Materials                                    -1.8% Information technology      -2.1% Utilities ...
Read more