Investing during the pandemic and after
Where to invest during the pandemic and after? Eventually anti-virus measures will be removed. Various sectors of the economy have already entered the recovery stage. The reason for the growth of markets now is currency issue. This tool is used by central banks to deal with the effects of the virus. In 2020 stock indices climbed to historic levels thanks to the actions of central banks. However, the market crash will be possible when the US economy shows more obvious signs of recovery. Many things will depend on the actions of the US Federal Reserve, when stimulus measures are discontinued and rates start to increase. Let’s consider some present and future possible investment options.
The tech sector seems overheated, but remains relevant. The sector is diverse: robotics, 3D printing, nano and biotechnology, artificial intelligence, quantum computing. The market is filled with ETFs with the same dynamics as the industries: ARK Autonomous Tech & Robotics (technology and robotics companies); Vanguard Information Technology ETF (IT companies); iShares PHLX Semiconductor ETF (semiconductor manufacturing companies); Robo Global Robotics & Automation (mainly American technology, industrial, IT and other robotics related companies).
The most relevant areas of the sector are teleworking services, e-commerce, semiconductors, electric vehicles.
Promising companies in the field of technology: Mimecast Limited (cybersecurity, protection of personal and corporate mail from hacking); NIO (electric vehicles); ChargePoint (charging stations for electric vehicles); Plug Power (development of hydrogen fuel cells that replace conventional batteries in electrical equipment and vehicles).
There are also high hopes for the financial sector. During the pandemic, it wasn’t as badly affected as expected. Banks put aside last year’s funds as insurance, but the expected wave of defaults never happened.
Investment activity didn’t decline during pandemic. At the same time, thanks to the policy of central banks, the amount of money in the economy has increased, which means that after the pandemic, people will more often transfer and deposit funds to accounts.
Promising sector example is 360DigiTech (a Chinese company that develops an online platform for the financial industry).
The healthcare sector is one of the most underestimated due to the lack of funding during the pandemic. Private clinics had to close, sales of insurance companies and manufacturers of medical instruments and equipment have declined.
At the moment, it may be worth paying attention to those sectors of the sector that have received less investment. A promising direction is the development of medicine against coronavirus and its consequences. The issue of investing in vaccines has already been resolved, but the medicine described above, on the contrary, is experiencing a shortage of funds.
The following funds can be considered: The Health Care Select Sector SPDR Fund (XLV) is the most liquid and largest of its kind, but it contains shares of large pharmaceutical companies that are currently limited in potential due to the vaccine situation. For example Johnson & Johnson and Pfizer. It is better to take them separately on descent.
The more profitable options are those funds that contain stocks of medical service companies and medical equipment suppliers. For example, iShares U.S. Medical Devices (IHI) and iShares U.S. Healthcare Providers (IHF).
Biotechnology is now considered as one of the most urgent areas. The task of this industry is to make a person’s life better and longer. The main focus of the industry is on the development of medicine for the treatment of serious human diseases and solving the problem of aging. Let’s consider examples of biotech companies that have dropped significantly in price recently, but have the potential to grow: Haemonetics Corporation (reason for the 36% drop: termination of cooperation with a client, whose share in revenue was 12%); IRhythm Technologies (40% drop due to changes in rates under the national health insurance program); Amarin Corporation (due to the virus, the drop in 2020 was 78%, but since the company is developing medicine for the treatment of cardiovascular diseases and is going to enter the European market, where mortality due to these diseases is high (1st place), there is good growth prospects; in 2021 the company’s quotes rose by 9.2%).
Biotechnology ETFs: ARK Genomic Revolution ETF (in 12 months the share price has more than doubled; companies that develop to improve the quality of life through advances in technology, science and genomics), LABU (in case of growth of the biotechnology industry the fund’s assets grow 3 times faster; BIB (2 times faster growing and falling); Global X Genomics & Biotechnology ETF (GNOM; genetic research).
Don’t forget to use MonInvAI when making your trading decisions!
