Investment Ideas for 2H2020
It seems almost yesterday that we entered 2020 with the risk of a pandemic looming over the world. Now, we are in August. Below are some of the investment ideas that would do well for the rest of 2020.
- Tech
Tech stocks have outperformed the market. MSCI US Information Technology Index have climbed 22.39% since the start of the year. The index count Apple, Microsoft, Visa, Mastercard, Adobe, Intel among its top constituents. The demand for technology is clear for all to see, especially as we do not expect a viable vaccine to be readily deployed before the year end. This entails continued WFH arrangements, online purchase & delivery of consumer goods, media streaming, gaming, social media usage, among other trends. These consumer behaviour trends will mean that the demand for tech products and services will remain strong. The question that remain valid for now is whether the elevated price levels of tech stocks and tech-focused funds presents an reasonable entry point for investors who have not participated in the sector prior to this. I am of the view that there is still room for this rally to run as the fundamental driver of demand will remain stable, if not increase.
2. Healthcare & Pharma
This one is quite clear. We are in a health crisis. Businesses providing, or who have the potential to provide the solution to this crisis, will definitely stand to gain. Like Tech, Healthcare and Pharma stock has also rallied since the outbreak. I believe that the rally will reach new heights once a vaccine is fully developed and starts to be manufactured and deployed on a wide-scale basis. Hence, now is not too late to enter into this investment thesis
3. Travel serving domestic markets
Given the assumption that the pandemic will not be neutralised until late 2021, coupled with hesitance of countries to implement full lockdown given the socio-economic costs, there will be travel bubbles forming around the world. There is strong pent-up demand for travel as lockdown fatigue become predominant. People will travel within travel bubbles that they are allowed to; mostly domestic or regional markets (eg Euro area). Travel businesses that cater to these sector will outperform the broader travel industry, which will remain in the doldrums until late in 2021.
