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Who are the stock market winners and losers from the coronavirus vaccine?

04 December 2020

4 minute read

As news of a potential coronavirus vaccine drives a surge in global share markets, we explore the likely winners and losers of a possible return to normality.

Who's it for? All investors

The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.

What you’ll learn:

  • What has happened to global share markets recently?
  • Who are the likely winners and losers of a potential vaccine?
  • How to invest to benefit?

News that the first coronavirus vaccine has been approved here in the UK, saw stock markets rally again this week. Global markets have been performing strongly since we first got wind of potential vaccines last month. Companies which had been unloved since nationwide lockdowns in March suddenly saw their share prices surge. But it wasn’t good news for everyone. Companies which had actually benefited from the lockdown restrictions suddenly found themselves left behind as the scramble for under-priced companies took hold.

But what we’ve seen recently is short-term market noise based on investor exuberance. While this is certainly a good thing for those investors holding shares which have gone up in value, it’s important not to lose sight of the bigger picture. Investing should always be for the long term. And while some shares may have performed well recently, this doesn’t necessarily mean that they will continue to do so in the future. Past performance is not a reliable guide to future performance.

Where there’s a winner…

Even before the Pfizer/BioNTech vaccine was approved by the British regulator, the prospect of three potential vaccines brought hope about the possibility of a return to normality, which excited the markets. Investors holding shares in the travel, hospitality and leisure industries in particular have since been rewarded.

However, although some shares have risen strongly in the short term, many are still well down on where they were at the start of the year and investors may still be nursing heavy losses. Things are still looking pretty bleak for many retailers and those in the hospitality industry.

In addition, while the shares in some sectors have enjoyed a recent surge, it is unlikely that the shares in all airlines for example will continue to move in the same direction and to the same extent in the future.

What is key to understand here is who the winners within these sectors will be. Who will emerge fitter, leaner and stronger, and be in a position to capture market share from their fallen rivals?

…there has to be a loser

It’s important to remember that quite a number of companies have benefited from the pandemic, whether that be takeaway delivery companies or online shopping sites. News of a potential vaccine sent the share prices in some of these companies lower. But was that justified?

To a certain extent, yes. There will certainly be some losers from an end to the pandemic, as not all companies will stand to benefit. But the last few months has no doubt changed our spending habits and behaviours perhaps forever.

What this means for investors is that it is even more important to sift through the winners to try and identify which of those companies will continue to do well and try to avoid the losers.

What’s the answer?

In short, leave it to the experts. Stock picking is challenging at the best of times. And while you may pick the winners today, how can you avoid picking the losers of tomorrow? For a professional fund manager, this is their bread and butter. With teams of analysts supporting their decision-making and regular, ongoing conversations with company management teams, they are well-informed and best placed to assess and compare companies from the wide range available to invest in.

It may sound easy to do it yourself but what does the future hold? Will we ever return to normality? Will the vaccine take longer to come to market than expected? If so, how do you know if the shares you may be considering today offer good value or are actually expensive?

This is what our active third party fund managers – those selected for our Funds List – have been doing all year. Looking at companies to understand how they will emerge from the pandemic. Will they emerge stronger and fitter, taking market share from their rivals who have fallen by the wayside? Or will they fail to emerge at all?

Where to invest?

We believe that the best way to achieve your long-term investment goals is to have a diversified portfolio. To help you we’ve created our Funds List – it’s made up of funds we like from the sectors we believe are key to building a diversified portfolio. Within each sector, there’s a mix of investment focus and investment approaches to choose from. So why not take a look at our selection?

Two funds which we like are the JO Hambro UK Equity Income Fund and the Merian UK Alpha Fund. Both are value managers who seek and buy high quality, under-priced companies. Both these funds are currently focused on trying to identify companies that could potentially bounce back from the pandemic and could form part of a diversified portfolio.

To diversify your investment, you may like to consider our own Barclays Ready-made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified one-stop solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.

Whichever option you choose, you must accept that all investments can still fall in value as well as rise and you might get back less than you invest.

We don’t offer personal investment advice so if you’re unsure you should seek that independently.

Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.

These are our current opinions but the future, as ever, is uncertain and outcomes may differ.

Find out more about our Ready-made Investments.

Plan & Invest is a new service which creates and manages a personalised Investment Plan just for you. Whether your long-term goal is your child’s university education, retirement or just building a nest egg, all you have to do is tell us a bit about yourself and then, if you’re ready to invest, let our experts select and manage your investments.

Read the Assessment of Value report for funds run by Barclays. [PDF, 683KB]

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