VIRUS SENDS SHARES ON WILD RIDE

THE recovery from this year’s COVID-19 sharemarket plunge is likely to take far longer than most investors and super fund members had hoped for.

Six months after Aussie shares tumbled more than 37 per cent in just four weeks from late February, they have clawed back almost twothirds of those losses — and there have been big winners and losers from the pandemic.

The outlook is cloudy as we head into the traditionally scary months of September and October, and share specialists say a full market recovery back to February’s record highs could take two to three years.

Looking at the best and worst performers on the ASX over the past year — taking in the COVID-19 plunge and rebound — paints a clear picture of the virus’s impact.

Among the top performers are gold stocks, benefiting from record gold prices, and online retail and payments companies, while tourism, travel, advertising and media have all struggled.

Investment newsletter Marcustoday.com.au’s chief operations officer, Chris Conway, said the past six months had been a “wild ride” for investors.

He said stocks in technology, healthcare and some sectors of retail had been the biggest winners, but many people who had kept holding the stocks they always did had not done well.

“Look at Myer and Kogan,” Mr Conway said. “Both sell a suite of products. One sells in a store and one sells online. One is diving and one is flying.” Mr Conway said government stimulus had strongly supported the sharemarket. “There are lots of risks, but there are also opportunities,” he said.

Mr Conway said the market’s full recovery “might take another two years” amid the current economic backdrop.

Shaw & Partners senior investment adviser Jed Richards said his best guess for a full recovery was between two and three years.

“Be selective in this environment — what you avoid is just as important as what you buy,” he recommended.

“Some industries have been slaughtered, while others have proved to be resilient and are enjoying the government stimulus.”

Mr Richards said online retailers were already previously stealing market share from traditional retailers but COVID-19 had given them a “steroid boost”.

“With JobKeeper, a lot of people ended up with $1500 a fortnight and thought that is perfect to upgrade the telly.”

Mr Richards said bank shares had been a standout disappointment during the pandemic, losing market share to fintech competitors such as buy now, pay later companies.

“For banks to thrive you need a growing economy,” Mr Richards said.

Mining stocks — especially gold and iron ore — were big winners. “Resources have had a golden period; their cashflow at the moment is brilliant but it will come to an end,” Mr Richards said, adding: “The iron ore price will slip back.”

For many investors, Australia’s

sharemarket has taken a back seat to global tech giants such as Apple, Netflix and Amazon booming since COVID-19 struck. This had prompted warnings by some analysts that they were overpriced, but Mr Richards said this argument was based on them being US stocks in a struggling US economy.

“But they are not US stocks,” he said.

“They are global stocks and are selling products right across the world.”

Ausbil Investment Management founder Paul Xiradis said he expected a general improvement in the Australian sharemarket over the next 12 to 18 months.

“There is potential for the recovery to really accelerate if there is an announcement later this year of an effective vaccine being approved or produced,” he said.

“That would give hope that we are past the worst.

“The fact is, we have got interest rates at close to zero, and people need to generate income is some way, shape or form.

“The risk of all of this is that we don’t find a vaccine or it just takes longer to resolve COVID.”

The ASX Australian Investor Study 2020, released on Wednesday, says 6.6 million people own shares directly, and COVID-19 has prompted many to focus on diversification and risk management.

Millions more hold shares indirectly through their superannuation funds. “If you got in at the low point, you would have a pretty big smile on your face,” Mr Xiradis said.

He said real estate investment trusts, popular among investors, had delivered mixed results, with those related to traditional retail and office space struggling, while anything that was involved with warehousing, logistics or data centres was performing well.