Written: 20/11/16 06:55 GMT FXTM Senior Market Strategist Hussein Sayed
Last week marked a turning point in the global market. The final clinical results of the good Corona 19 vaccine released Monday by Huizawa Bio&Tech overwhelmed the negative factors of the corona confirmed number, the number of inpatients and the number of deaths.
More and more investors are looking at the next few months. The number of vaccine candidates with good clinical results is expected to increase in the coming years, raising the possibility that Korona Pandemics will end as early as next year.
The timing and method of the vaccine deployment is still uncertain. These details are not affecting the market yet. Investors saw a ray of hope at the end of the dark tunnel and are responding accordingly.
The most damaging sectors of Pandemics are aviation, lodging, finance, energy and retail, with the biggest gains on vaccine news. On the other hand, tech shares, which benefited from Corona 19, fell below market returns last week.
Whether this cycle will continue or end in a short period is debatable. In the long run, however, it seems worth holding on to cyclical stocks and sentiment stocks. If the vaccine effect and continued fiscal stimulus are combined, the 2021 performance of the business cycle and economic sentiment sectors will be able to grow by double digits compared to the technology sector that is expected to struggle compared to 2020.
Another headache for growthism is rising bond yields. If bond yields are higher than they are today, fewer investors will pay growth premiums. However, bond yields are still far from the long-term average and are likely to remain low until 2021.
Technology stocks are likely to fall below market returns with a return to normal, but that doesn't mean they should be excluded from the portfolio. Technology continues to play an important role in distributed investments, as borrowing is a sector with large market capitalization and ample cash flows. I agree that the valuation of many technology stocks is excessive, but high profit growth will be maintained over the long term.
Vaccines, lockdowns, news about the U.S. presidential takeover will be the reason for the volatility in the coming weeks. But this can be a good low-cost buying opportunity.
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