Who are losers from the COVID-19 vaccine?
A return to normality thanks to a COVID-19 vaccine will highlight those stocks where valuations have been overdone in recent months and could see them struggle.
These would be healthcare stocks which had been providing PPE equipment and ventilators for the outbreak and online shopping, which would lose out as people returned to bricks-and-mortar retail.
Tech disrupters which been rising in share price in expectation of future profits from a digital and contactless COVID-19 world would also be hindered.
AMP Capital Australian equities portfolio manager, Dermot Ryan, said: “With the shift of earnings growth back into real businesses, some of these growth valuations are hard to justify and may push valuation multiples lower as the rate of change of customer adoption turns negative.
“The run up in valuations in tech has been overdone and there are real risks to their stock prices here if revenue trends moderate.”
A vaccine would also inoculate inflation and boost growth which would prompt a rotation of investment out of bonds and into equities that were reasonably valued.
Winners from the vaccine would be travel, energy and banking as they had struggled during the pandemic from factors such as border restrictions, lack of energy demand and weak commodity prices.
“These three poster child value sectors are now so cheap that they might offer high earnings per share growth, as much lower valuations than you can get in the growth side of the market and that is why they can make sustained gains as the virus is forced to retreat.”
AUTHOR
Laura Dew
Recommended for you
Platinum Asset Management has put its two closed-end funds under strategic review in a bid to reduce the share price discount to pre-tax NTA and maximise shareholder value.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
