Two technology stocks with structural tailwinds: Munro Partners

July 14, 2020

Writing for Livewire Markets, Nick Griffin – CIO Munro Partners – writes for Livewire Markets.

Global equity markets had their highest quarterly returns in decades as markets rebounded from the March COVID-19 induced lows. The dramatic recovery was led by essentially a ‘less bad’ outlook on COVID infections and an unprecedented wave of stimulus by central banks and governments across the globe.

The key stimulus package came from US President Donald Trump who signed the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. This $2 trillion US stimulus package was the largest emergency relief bill in American history. Similar packages were passed in other developed countries, combined with co-ordinated central bank efforts to lower interest rates for sovereigns and corporates alike.

Asset prices responded in kind with all asset classes rising. However, equity markets did bifurcate from the lows with strong differentiation between the so-called digital and technology ‘winners’ in a post COVID world and the so-called bricks & mortar retail, financials and autos ‘losers’. This is most evident when looking at the calendar year performance of indices in the US, where the Nasdaq is up 13.7% and the smaller cap Russell 2000 index is down 14.2%.

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