Photographer: Anthony Devlin / Bloomberg
Photographer: Anthony Devlin / Bloomberg
Some of the world’s best money managers are betting on a post-pandemic spending boom that will boost real-world companies as economies reopen and people return to normal life.
Investors at Aberdeen Standard Investments Inc. and GAM Investments to UBS Asset Management are investing more and more money in companies where face-to-face interaction is the norm – things like travel companies, restaurants, offline shopping and “consumer experiences”.
“A lot of people think that this will really lead to a new ‘roaring 20s’ theme,” said Swetha Ramachandran, manager of GAM’s Luxury Brands Equity fund, referring to growing views that post-pandemic spending will return. to excesses in the 1920s. Then euphoric consumers piled up in a wave of spending after World War I and the 1918 flu pandemic. “There will be a lot of peace” as people begin to socialize, she said.
Investors began to accumulate in cyclical stocks benefiting from an economic recovery at the end of last year, following good news on the vaccine front, while withdrawing from high-tech technology stocks. The turnover accelerated as Treasury yields rose in mid-February. Now with stimulus controls heading to the US – the beneficiary of half of the $ 2.9 trillion savings accumulated globally during the pandemic – consumer stocks are for an even greater recovery.
Certainly no one is saying that the pandemic is near. Europe is facing a slow, renewed vaccine launch restrictions on daily life in some countries, while the seven-day average of new cases of Covid-19 in the US has increased, showing that state cases are rising again and threatening a return to normal life. Digitization is here to stay – no retailer will return to a pure world of bricks.
But a short-lived shift in consumer discretionary stocks in November, when “reopening” trade became fashionable, is set to catch up. A sub-track of global energy quotas is the best performing by sector at the end of October, up 53%, while the index for discretionary consumers is only 17% higher.
In fact, the overall consumer discretionary gauge is expected to return 17% over the next 12 months, according to data compiled by Bloomberg, while the S&P 500 is expected to increase by 12%.
“People want to travel. They want to see a family they haven’t seen in a long time. They want to go out with friends, ”said Donny Kranson, European equity portfolio manager at Vontobel Asset Management.
Theme parks, airlines and even beer are back.
When it comes to travel, the funds are betting on parking-friendly hotels, such as Marriott International Inc. and home sharing company Airbnb Inc., theme parks such as Six Flags Entertainment Corp. and even the Chinese online travel agency listed in the US Trip.com Group Ltd., based on interviews with Miller Tabak + Co., Scottish Investment Trust and AGF Investments Inc.
Marriott has gained 11% this year so far, while Airbnb, Six Flags and Trip.com have advanced 19%, 41% and 11%, respectively. All outperformed the S&P 500 in 2021.
Restaurant chains like Cheesecake Factory Inc. and popular alcoholic beverages in largely closed nightlife venues, bars and restaurants such as Heineken NV, Anheuser-Busch InBev NV and Pernod Ricard SA, which distills Absolut vodka, are also in play.
Large, suburban malls that have adapted and allow social distance shopping should also do well, said Calum Bruce, fund manager at Ediston Property Investment Company.
Perhaps the biggest change money managers see in consumers’ appetites as life goes offline is the “premiumization” of tastes in food, cars, cosmetics, and clothing. Jimmy Choo owner Capri Holdings Ltd. in the US and more affordable luxury brands such as SMCP in France, which owns the Maje and Sandro labels, are considered to be beneficial if the theme of reopening takes place.
Even state-of-the-art brands, such as Gucci owner Kering SA and China’s largest stockholder, Kweichow Moutai Co., are indispensable as people transact, some fund managers say.
“In markets such as China, strong primary trends are visible in segments such as beer, dairy, spirits, cosmetics, spices, branded and four-wheelers,” said Shou-Pin Choo, portfolio manager for equities. Asian at UBS Asset.
– With the assistance of Suzannah Cavanaugh