The winners and losers of LOCKDOWN
( ... and it’s not too late for investors to cash in
CORONAVIRUS has shaken up the stock market — sending some shares soaring, and others spiralling down. The past three months have seen stakes in an online white goods retailer double in value, while shares in the world’s biggest sandwich-maker plummeted.
Technology and media firms have also blossomed in the virus crisis, along with medical tech companies.
But can we learn lessons from lockdown, and what does performance during the pandemic mean for investments?
Performance figures from the FTSE 350 show online domestic appliance firm AO World came out on top in lockdown.
The year’s second-quarter results reveal its share value rose 104.7pc from March 30 to June 30 — turning a £1,000 investment into £2,047. The firm’s value has risen as demand for freezers, air conditioning, fans and other goods rocketed in lockdown.
The second best performer was miniature fantasy model and hobby company the Games Workshop Group, which rose 85.57 pc in value. And the rush to invest in gold was shown by Hochschild Mining which gained 82.7 pc.
Homeware store Dunelm has also benefited with a rebound in its share price, which rose by 68.3 pc over the quarter.
Rob Burgeman, of wealth management firm Brewin Dolphin, says Games Workshop could be a good bet for the future. He says: ‘[It] is a niche market which has acquired a whole new legion of fans, which should ensure it continues to thrive.’
On the other side of the coin, Greencore Group — the world’s biggest maker of sandwiches — has seen its shares fall by 22.1pc. It means a £1,000 investment will have been reduced to £779.
Shares in carmaker Aston Martin Lagonda have fallen by 21.6 pc. Those in loans firm Provident Financial lost 19.4 pc over the quarter. Defence giant Babcock International dropped 18.82 pc.
But Mr Burgeman says badly hit stocks are not always a bargain.
He says: ‘Don’t get sucked into value traps — if a stock has gone down in value it doesn’t mean it is worth snapping up. Instead, focus on the quality of a company.’
He warns that despite lockdown easing, it was too early to gamble on certain sectors making a quick recovery. He adds: ‘Pubs may be open again, but it’s going to be a long time before we will be able to see how they weather the storm.’
Technology and media firms performed best in the first half of 2020, Association of Investment Companies (AIC) data shows.
Millions of us came to rely on technology during lockdown with working from home becoming the norm. The results show the sector generated a return of 29 pc in the first six months of the year.
The biotechnology and healthcare sector also went up by 16 pc — reflecting the demand for medical equipment and the global drive to fight coronavirus.
The worst-performing sector was leasing — with the average value falling 48.1pc. It is largely made up of firms that lease aircraft and were badly hit when the virus killed off international travel.
The AIC says while the average investment company was down 6pc over the first half year, it had gained 170pc in the past ten years.
Annabel Brodie-Smith, AIC communications director, says: ‘The first half of 2020 will be remembered for one thing, but while Covid has put pressure on health and livelihoods, there have still been areas of strong performance, particularly given the rally of the past few months.
‘Whether it’s watching Netflix, chatting on Zoom or keeping in touch with colleagues on Microsoft Teams, technology has helped us keep going through lockdown.’
However, Justin Modray, of Candid Financial Advice, says a second coronavirus wave could kill off any immediate recovery of struggling stocks.
HE SAYS: ‘It’s no surprise that companies able to deliver food, home appliances and other goods to keep us occupied during lockdown have prospered, while those who had to temporarily shut up shop have struggled.
‘Whether this means firms like Aston Martin and Greencore will bounce back remains to be seen.
‘If the economy picks up, Covid-19 subsides and such companies have enough cash to get back to full speed, there’s a reasonable chance of recovery.’
His strategy would still be to invest in a range of sectors. He adds: ‘You could build a defensive portfolio always expecting the worst, but then you’d likely miss out when the good times arrive.
‘I favour holding a wide mix of investments across a range of sectors and asset types. Whilst this doesn’t insulate you from events like Covid, it should at least soften the blow.’