Investment Strategies in the Coronavirus Era
Now it's official. The world has entered an era where COVID-19 will be the most important factor. The first outbreak of the disease was recorded in December 2019 in China. But it quickly became clear that this virus would penetrate other countries and become a global problem. Two months later, WHO declared the outbreak an international emergency, and on March 11 a pandemic. Against the background of the pandemic news, major stock indices fell by 16-22% over several days.
This market situation can be called panic. But we will try to predict which investment strategies can be successful in this new reality.
All for lockdown
Lockdown measures and self-isolation will become an additional factor for the development of IT companies. We predict that the tech sector will be the least affected by the pandemic. It has been around forever, and the pandemic will only give an additional impetus. IT has all chances to show the largest increase through the pandemic.
Companies whose products will become a quarantine replacement for traditional things should not be afraid of collapse. For example, streaming services instead of cinemas and concert venues, online shopping instead of traditional shopping and restaurants, home exercise equipment as an alternative to fitness in clubs and outdoors.
Even under the most stringent quarantine measures, grocery retail should not suffer. A complete closure of stores selling goods of prime necessity and groceries is hardly possible. Trading companies that have developed online platforms will feel especially good.
The chances for growth and its digital indicators will be greater the longer the epidemic lasts.
All for health
Shares of biotech and pharmaceutical companies will predictably rise. The world’s major players have announced plans to create a vaccine and drugs against COVID-19. And after some time it will be implemented.
However, this is very obvious and the investors have already expressed interest in this industry. The shares of these companies have already risen when the rest collapsed. Therefore, it is probably not worth counting on further multiple growth. Moreover, to be successful in their development, you still need to invest heavily in this research. And given the importance of the issue to people’s health and countries’ security, regulators are likely not to allow companies to mortgage excess profits.
Pick up the fallen
Purchase of collapsed shares at the lowest possible price could become another investment strategy in the time of coronavirus.
It can be assumed that the worst has already happened, and further the shares of the companies, even the sectors most affected by the pandemic, will grow. Sooner or later the pandemic will end. The only question is how early or how late. And how long will the company's margin of safety and investors' patience last.