At GAM Investments’ latest Equities Meeting, held on 8 December, Christophe Eggmann, Niall Gallagher and Ernst Glanzmann shared their thoughts on equity markets as we approach the end of 2020.
Christophe Eggmann – Healthcare Equities
The US Food and Drug Administration (FDA) said on 8 December that data on the Pfizer / BioNTech Covid-19 vaccine was in line with its guidance on emergency use authorisation. This is encouraging news for the US population and markets overall. The announcement came ahead of a FDA advisory committee meeting on 10 December to examine the findings in greater detail. The same group will convene again next week to discuss the Moderna vaccine. For obvious reasons, Covid-19 has dominated 2020. Investors and indeed wider society are questioning when healthcare companies and the associated services, such as cancer screening and cardiovascular treatments, will return to normal. Our assumption is H1 2021 will continue to be dominated by Covid-19. Beyond that, we expect conditions to normalise. We see interesting opportunities among companies indirectly benefitting from Covid-19 disruption and accelerating trends, particularly in the areas of digital health and DNA sequencing.
Niall Gallagher – European Equities
The UK’s Covid-19 vaccination programme began on 8 December and the US should be close behind. This is welcome news for significant parts of the European economy which have been hit hard by Covid-19 lockdowns and left with a consumer base either unable or not confident enough to spend. We believe the extent of pent-up consumer demand will see areas such as travel and retail perform well in the early part of 2021. Furlough schemes and fiscal transfers have limited unemployment and left consumers with record savings balances. This is not a normal recession and as a result we expect the rebound in certain areas to be significant.
Ernst Glanzmann – Japanese Equities
While Asian markets are still somewhat occupied with news flow from the US and Europe, the comparison between the experiences of Covid-19 is stark. There has been less impact in Japan; to put this into perspective there are around 1,500 - 2,500 cases and circa 40 deaths daily for a population of over 100 million. These facts are materialised when looking at the small movements we have seen in equity markets recently and the V-shaped recovery in many key sectors. Japanese export activity is positive both in the Asian area (growing 4% year-on-year) and, to a lesser extent, to the US (growing 2% year-on-year). We believe positive momentum will continue into next year and expect to see a sharp rebound in corporate earnings which is already visible from the Q3 results.
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. The companies listed were selected from the universe of companies covered by the portfolio managers to assist the reader in better understanding the themes presented. The companies included are not necessarily held by any portfolio or represent any recommendations by the portfolio managers. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice.