The coronavirus pandemic has toppled global markets, but from the economic ashes several innovative and vital businesses are rising.
In the US, companies helping other businesses take their workplaces online have become hot property, notching up percentage gains well into the double digits.
Teleconferencing company Zoom has been a standout, Saxo Capital Markets’ market strategist Eleanor Creagh said, with the stock price lifting more than 80 per cent since mid-January.
The company’s gains have been so immense, investors have since named the rally in work-from-home stocks the “Zoom boom”.
And according to Ms Creagh, there are plenty of others seeing a similar surge in value.
“There’s also a bunch of cloud and software stocks that have benefitted from the work-from-home environment, such as Citrix and DocuSign,” she told The New Daily.
It’s a rally that has the potential to outlive the coronavirus, as the sudden shift to working from home may lead to “structural change” in many industries.
“It’s not going to be a 100 per cent transition, but I would say the capacity to work from home has now been proven,” she said.
“In that sense, I think there’s the beginning of a shift towards people being more flexible.”
It’s also a positive indicator for other businesses too, suggesting that many are able to make the leap to working-from-home and potentially keeping workers employed.
Is the stock market returning to normal?
The coronavirus-infected has hit stock markets as badly as it did the rest of society, shuttering already weak businesses and leaving the survivors too nervous to move.
Australia’s benchmark ASX 200 market index saw historic falls in early March as businesses and investors started to feel the full force of the coronavirus’ spread.
But in a stunning reversal of the axiom ‘what goes up, must come down’, the index has since recorded incredible gains.
From market open on Monday, the ASX 200 gained 8.5 per cent by 10:30am on Friday when it hit its highest weekly point, before losing some of those gains in the afternoon.
But by close, the market was still 1.2 per cent above it’s opening level on Monday.
“This has been one of our best weeks in some time,” Bell Direct market analyst Jessica Amir told The New Daily.
“It’s an unheard of gain. Looking at the data, the last time we saw a gain of this magnitude or anything close was March 29, 2019, so it’s been a strong week.”
Those gains were underpinned institutional investors, all of which are legally required to rebalance their investment portfolios for their clients ahead of the third quarter’s end on March 31..
“That’s why we’ve seen some stocks make outstanding gains,” Ms Amir said.
But it’s not the only reason markets rallied – immense stimulus packages both in Australia and abroad (particularly the $US2 trillion package floated by the US) helped stocks rebound.
It’s a rare bit of much-needed good news, but sadly in the short term it’s unlikely to last.
Ms Amir said the economy is expected to “grind to a halt” as recession grips the country, cautioning the next quarter could be “one of the darkest periods for GDP growth” that we’ve ever seen.
In the long term, things are a little different though. Economic conditions will likely start to pick up later in the year, Ms Amir said.
In the meantime, businesses within the consumer staples sectors (such as groceries, energy, and healthcare services) will likely see continued strength.
For would-be investors, Ms Amir had some parting advice:
“Investors need to focus on quality stock – things with low debt, and high repeatable earnings.”