The re-opening of global economies after lockdown is leading to ‘revenge spending’ as consumers take full advantage of their newfound shopping abilities.
According to J.P. Morgan Asset Management (JPMAM), consumers were making the most of stimulus payments and household savings. For many people, these had increased due to reduced commuting costs and lack of holidays.
Retail was also benefitting as people were unable to spend money on international holidays like they may have done in the past.
It was estimated by Treasury that deposits into saving accounts by households grew by $100 billion in the 12 months to the end of November, 2020.
Kerry Craig, global market strategist, said: “There is revenge spending going on, people have been cooped up at home and now they are taking their revenge on COVID-19 by going out and aggressively spending”.
The areas set to benefit most from this ‘revenge spending’ were bars, restaurants and high street stores, he said.
Peter Gardner, senior portfolio manager at Plato Investment Management, said: “We are positive on consumer discretionary, those retail stocks have seen increased sales over COVID-19, it has been huge for them.
“We expect this to continue when things open up again, we think it will take longer than expected for things to get back to normal and there is a huge level of income that will be spent on discretionary goods.”
He namechecked Harvey Norman, Adairs, JB Hi-Fi, and Super Retail Group as stocks which the firm was keen on.
The best performing of these stocks over one year to 14 April, 2021, was homeware retailer Adairs which had risen 264% compared to returns by the ASX 200 of 31.5%. Meanwhile, both Super Retail Group and Harvey Norman had risen by more than 100% over the same period.
