Based on IMF estimates, with the world’s GDP rebounding to 5.2% growth in 2021, coming from very sharp contractions, such as the one suffered in the Eurozone. Everything points to a recovery of the GDP in “V”, but what about the markets? It is said that the sectoral recovery will be V, U or K.
Considering an ultra-low interest rate environment and unchanged until well into the recovery phase, investors have to continue to opt for riskier assets, and specifically equities. While it was high-growth companies that led the gains in 2020, the recovery is expected to be broader in more sectors.
As the manager’s report shows, the main sectors moved in very different directions and there are some that were favored and others affected by the Covid. Among the disadvantaged are travel and food services that have pent-up demand, but also those affected by a fear of a severe recession such as energy and retail. But there are also others that enjoyed a strong business acceleration such as technology, health, basic consumption and DIY or household items through teleworking.
He health sector has experienced a very interesting stage, supported by advances in medical technology that favor cost reduction and the generation of opportunities for various companies. There has been a increasesignificantof thedemand for online medical appointments, but the forecasts are even more overwhelming. While in 2019 the volume of the market global telemedicine era $ 46 billion, for 2026 it is expected to be from $ 176 billion, that is a annual growth of 21%. According to the manager Wolf, among the companies that could cover the increase in demand in remote health control, the highlights are DexCom, ResMed, Insulet, Tandem, iRhythm, and Abbot.
The renewable energy it has been and will be another of the winning sectors. Government entities, schools, homes and institutions are investing in green energy. But they are still in the early stages of the transition process. Greater incentives are needed from governments. However, in Europe the transition is more pronounced, mainly in Germany, Denmark and Italy, where their governments have set high decarbonisation targets and created incentives for new investment, not just in networks and infrastructure, but in storage. Just look at how European companies have reached a turning point in renewable energy capacity:
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Another of the equity managers, Saligman, trusts that he will sue it in the travel sector (flights and even cruises) recovers, and although it is not known how quickly they will do so, many investors have begun to take positions in some of these companies. In China, domestic air transport has increased and the same could be expected elsewhere.
But without a doubt, the technology / digital sector will continue to make headlines. The digital divide will continue to be an issue for surviving companies to navigate. Those with a digital advantage, with an online business model, fast and efficient will set themselves apart from their competitors. It covers a large number of sectors such as fitness, education, advertising, entertainment, retail, payment processing and more. But there are sectors in which digitization cannot compete, such as in traditional manufacturing processes. According to Buchbinder, manager of equities, it is possible that growth rates will slow, but it will be difficult to cancel subscriptions.
Even the new prime minister of Japan, Yoshihide Suga, makes digitization a priority in your renovation project. At the beginning of the pandemic, the proportion of Japanese who worked from home was well below other developed countries, with the penetration of cloud services greatly reduced due to their complex technological systems, little standardized and highly manual. But the interest of the government opens the door to a wide range of opportunities.
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The Investment Strategies analysis department analyzes the annual outlook for 2021.
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