29 May 2020
At GAM Investments’ Weekly Equities Meeting held on 26 May, Mark Hawtin discussed the acceleration of technology trends as a result of Covid-19.
Mark Hawtin – Technology Equities
Aside from the tragic human toll of Covid-19, from an academic standpoint, the pandemic has produced the world’s largest experiment in key disruptive technologies. The stay at home concept has demonstrated the effectiveness of cloud infrastructure and trends which may have taken 20 years to fully flourish have been given an enormous kick forward. Most companies are looking at a far more flexible working structure with many firms likely to opt for a smaller real estate footprint, which is negative for the commercial property industry. Overall, there are big changes occurring which we believe may present opportunities for outperformance.
In general, value stocks have underperformed year-to-date. However, in the last week, value and cyclical shares have performed well. This may be due, in part, to some of the enormous central bank liquidity trickling down to other areas of the equity market. It is important to work out where value still exists. Many online retail stocks have been driven up on the basis that online retail will continue do well, but some are low quality names and in a more normal environment we expect to see differentiation between real winners and losers.
Meanwhile, secular growth names continue to perform well. The virus numbers are improving and there is less pressure on healthcare systems. This has been a relief for markets; it remains difficult to tell if the broad equity market recovery is sustainable or if it is a false dawn. We ultimately believe the structural winners should continue to succeed and with digital / online trends accelerated, we do not see the current disrupters being themselves disrupted.
Source: GAM unless otherwise stated. The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is no indicator for the current or future development. May 2020.