The coronavirus outbreak has taken a significant socio-economic toll across the globe, with nations such as Singapore projected to experience an economic contraction of between 4% and 7% over the course of 2020.
While you may think that this type of global contraction would deter investors from committing their capital in the near and medium-term, there are actually numerous opportunities to generate a profit and capitalise on movements within an array of markets.
In this post, we’ll look at why now could be the ideal time to invest your money, while addressing the best markets and options in the prevailing climate.
Why Should You Invest Now?
While global recessions and economic downturns have the capacity to decimate markets and industries, this is not the case in all instances.
This has been borne out during the recent coronavirus outbreak, with lockdown measures across the globe triggering a shift in consumer behaviours and increasing the demand in markets such as e-commerce, parcel delivery and IT services (we’ll have a little more on this below).
It’s also interesting to note that the economic decline caused by Covid-19 has devalued a number of so-called “blue chip” stocks, creating a scenario where such assets have been made available at a far cheaper price.
This is ideal for dividend investors or those who maintain a long-term outlook, as while the stock market may continue to fluctuate during the second half of 2020 (after rebounding from historic lows in March), the underlying sentiment behind FTSE 100 and similar stocks will drive a significant rebound over time.
This can definitely increase your profits over time, particularly if you’re able to target small or mid-cap stocks that have increased growth potential.
Even for investors with short-term objectives, derivative assets such as currency can also prove valuable during the Covid-19 outbreak.
The reason for this is simple; as you can speculate on the performance of specific currency pairings and strive to capitalise on the relative growth of assets such as the USD, even as the market continues to depreciate.
What Assets and Markets Offer the Best Opportunity in the Current Climate?
If you do intend to invest in stocks, however, there are several markets that have thrived over the course of the last six months. We’ve already spoken about the rise of e-commerce, of course, with online sales in the UK growing by a staggering 168% in May alone.
In this respect, online retail brands and delivery companies offer a unique investment opportunity at present, and this trend is unlikely to change markedly given the potential for future lockdowns and the gradual shifts that have been observed in consumer behaviour over time.
Interestingly, commercial cleaning is also poised to benefit from the Covid-19 outbreak, with a secular tailwind expected to follow a huge increase in the demand for specialist services such as fogging (which effectively cleans and disinfects surfaces).
This boom may not last for too long, but it definitely creates an opportunity for investors to profit in the short and medium-term.
We’ll also see medical device companies continue to boom throughout 2020, with the prominent firm DexCom boasting 43% gains this year against a broader -9% decline within the S&P 500.
This highlights the diversity of growth opportunities post-COVID-19, of course, as while some sectors have failed others have experienced considerable booms.