Chasing a Vaccine - Stock Rotations Now and in Coming Months
News of Covid-19 vaccines has dominated financial markets the last few days. With the preliminary trial results showing effectiveness above 90% for two vaccines having sparked enthusiasm, the S&P 500 has hit record highs and Brent has advanced to $44/bbl. Within stock markets, pandemic underperformers have massively outperformed the so-called stay-at-home stocks. In the near term, we expect to see more rapid swings of market sentiment, ranging from enthusiasm stemming from further vaccine news to despair that the return to the pre-pandemic normal is not happening fast enough. We also construct baskets of Russian back-to-work and stay-at-home stocks and demonstrate that the pandemic news flow has been and likely will continue to be a key factor in their relative performance.> Enthusiasm understandable, but news was expected. The preliminary trial results for the vaccines of Pfizer and Moderna have shown markets a light at the end of the tunnel of the pandemic. That said, public health experts and pharma companies had long guided that a vaccine would take around a year to create, and that's exactly where we are now, with mass deployment of the first vaccines due to start in December-January at the earliest. Based on the latest reports, it could take as much as another year to administer enough vaccines globally to potentially bring the pandemic to an end. Hence, the market's enthusiasm in reacting to recent news seems a bit premature.> What we can learn from recent bouts of enthusiasm. On days when relevant news has emerged, the global stock market has ferried back and forth between stay-at-home stocks and back-to-work names with massive rotation from one group to the other. Even though the recent reaction may seem premature, we can expect to see it return on a larger scale once market participants can confidently say the global economy will return to something like the pre-pandemic normal.> Russia stay-at-home and back-to-work baskets. In the Russian context, we define stay-at-home stocks as media/IT, food retail, telecoms, utilities, gold and real estate names. Back-to-work stocks are those in the transport sector, oil and gas, metals and banks. The former have massively outperformed this year. At this time, we suggest a tactical approach of primarily remaining in the stay-at-home portfolio, but considering a rotation in the longer term to take advantage of the wide performance gap between the two.AK Alrosa PAO. AK Alrosa PAO (Aktsionernaya kompaniya ALROSA PAO or ALROSA Company PJSC), formerly AK Alrosa OAO, is a Russia-based company which is principally engaged in the exploration, mining, manufacture and sales of diamonds. Its operations include five Integrated Mining and Processing Complexes: Mirny, Udachny, Aikhal, Anabar and Nyurba located in the Sakha Republic; sorting divisions and diamond cutting and polishing division. The Company is a member of variable diamonds associations. It operates through several representative offices, branches and subsidiaries, including Alrosa-Nyurba OAO, Almazy Anabara OAO and Severalmaz OAO.
Mail.Ru Group is an Internet company based in the Russian Federation. Co. operates the email service [email protected] and two IM networks in Russia - Mail.Ru Agent and ICQ. Co. operates two Russian-language online social networking sites: Moi [email protected] and Odnoklassniki.ru, and owns a strategic minority equity stake in the social network Vkontakte. Co. is also engaged in developing projects in E-commerce and operating more than 40 thematic vertical sites, targeting various user categories. Co. is also Russia's predominant online games company. Co. maintains a portfolio of online games which includes 34 MMO games and over 30 games for social networking sites.
Moskovskaya Birzha MMVB-RTS PAO. Moskovskaya Birzha MMVB-RTS PAO (MMVB-RTS OAO) is a Russia-based integrated stock exchange that provides electronic trade organization, clearing and settlements on trades, depository and information services. The Company provides trading and settlement services in such segments of the financial market as foreign exchange (FX) market, federal bonds market, market of derivative financial instruments, cash equities market, corporate and regional fixed income market, commodities market, as well as market for state and municipal orders. The Company was established as a result of the merger between MMVB ZAO and RTS OAO. It operates through six branches and three representative offices. As of February 27, 2013, the Company's major shareholder was the Central bank of the Russian Federation with a stake of 22.47%. In January 24, 2014, the Company sold its whole stake in MMVB-IT ZAO.
Yandex is an internet and technology company that operates an internet search engine in Russia. Co. builds intelligent products and services powered by machine learning. Co.'s products and services are based on complex, unique technologies that are not easily replicated. Co. generates substantially all of its revenues from online advertising. Co. also generates revenues from its e-commerce offerings, classifieds and e-hailing service. Co.'s businesses are organized in the following operating segments: Search and Portal; E-commerce; Taxi; Classifieds and Experimental businesses.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.