Euro on Sunday standpoint: Share expert Grtner: With the corona vaccine it goes back to “Go” | message
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by Benjardin Grtner, guest author of uro am Sonntag
ZThe Mainz-based company BioNTech announced unchst that they wanted to apply for approval of a vaccine against the coronavirus together with its US partner Pfizer. A few days later, the US pharmaceutical company Moderna made a similar headline. Two different vaccines, one signal: the pandemic could soon be over.
The prices on the stock exchanges shot up. The increase was not limited to the pharmaceutical values mentioned. Rather, the share prices reacted broadly. There are good reasons for that. Scientific success actually changes fundamental things. The market participants act as if we are at the beginning of a new business cycle. The thought behind it: The pandemic brought us a short but sharp recession. Almost all sectors of the economy were badly affected. With the research breakthrough, the rules of the game have changed: it’s back to “Go”.
Thanks to the potential vaccines, life in pre-crisis mode with normalized air traffic, traditional production conditions and trade relations is in sight again. The former losers of the pandemic were able to score again on the market: dividend stocks from the airline, tourism and banking sectors rose by double digits. In contrast, stocks from previous crisis winners such as online retailers or laboratory suppliers slipped. Professional investors refer to this as sector rotation.
Indeed, one can assume that earnings and valuations for cyclical stocks are likely to rise in the future. However, too one-sided positioning should be avoided. The vaccines are still pending approval. In addition, it is not yet known how quickly the vaccine doses can be distributed and how reliable the vaccination is in the long term. Until when the scientific breakthrough will actually result in a normalization of economic life cannot be precisely predicted.
A certain degree of caution is therefore advisable when investing, albeit spiced with cyclical elements. This makes it possible to participate in the shift in earnings dynamics between sectors without taking too great a risk. For example, selected logistics and automotive stocks, which are still comparatively favorably valued, can be added. The latter could also experience further tailwind from the federal government’s new purchase incentives. But IT stocks, for example from the semiconductor and the more defensive software area, should not be missing in the portfolio. However, the price / earnings ratios are rather advanced here.
Long-term trend winners are retained
But not everything will change in a new cycle. Higher ratings from structural winners from long-term trends such as the digitalization will remain on the market for a long time. This is not least due to the capital market environment. The central banks have shifted their focus somewhat away from fighting inflation towards supporting the growth forces. So interest rates will remain low for the time being. In addition, the stock exchanges also support infrastructure programs of the governments with which they want to stimulate the weakened economy again. This combination should in principle ensure strong increases in profits for companies. But it is also clear: industries that were punished for the coronavirus in 2020 should catch up above average. By contrast, high-flyers in recent months should see less growth.
Head of Portfolio Management Equities at Union Investment
Grtner is a member of the Union Investment Committee, which formulates Union Investment’s capital market strategy on a monthly basis.
Union Investment is the fund company of the Volks- und Raiffeisenbanken and, with assets currently under management of around 370 billion euros, is one of the largest German asset managers for private and institutional investors.
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