22 November 2023
Confidence in markets is beginning to return as news that three experimental COVID-19 vaccines could be administered to the global population from early next year. This vaccine optimism has already underpinned a sizeable rally on Australia’s leading ASX 200 index, which recorded its best November in 32 years this year.
Confidence in markets is beginning to return as news that three experimental COVID-19 vaccines could be administered to the global population from early next year.
This vaccine optimism has already underpinned a sizeable rally on Australia’s leading ASX 200 index, which recorded its best November in 32 years this year.
The index also almost returned to its pre-COVID levels despite an almost 40 percent contraction between March and April, even though no vaccine has been commercially released yet.
Rob Calnon, senior investment analyst with small and micro-cap investor OC Funds Management, said that these green shoots are emerging because investors are constantly looking forward, rather than trading based on the here and now.
“The vaccine is all about 2021, and equity markets are obviously not thinking about what’s going on today, they’re thinking about what’s going on in 2021 and beyond,” he said at Reach Markets’ ‘Meet The Fund Manager webinar on 27 November.
“[A vaccine] won’t be a silver bullet – there will be some people that won’t be taking the vaccine, there will be some people who can’t access the vaccine – but it will certainly give cause for optimism for investors, and investments in things we think of as the ‘recovery trades’.”
Riding the recovery
Included in the list of businesses set to benefit from a vaccine are companies exposed to either tourism, or oil and gas consumption, Mr Calnon said.
“Those investments should be driven by a positive view by investors over the short/medium term. And we’re seeing that already in the current markets since the vaccines began to be announced earlier this month” he said.
One big opportunity lies in auto parts and car servicing, Mr Calnon added, noting that as people are allowed to drive once more, there will be more cars on the road and inevitably, more accidents. OC Funds Management have taking a stake in companies like aftermarket car parts provider Bapcor – which owns well-known auto aftermarket brands Autobarn and Burson Auto Parts.
“Bapcor is a great example of a company that’s going to be exposed to the increasing use of autos in the coming years,” Mr Calnon said.
“There’s a pent-up demand for servicing, because people haven’t been servicing their cars, they’ve been barely driving them so what’s the point of getting them serviced?”
This article is a summary of the information Mr Calnon shared with us during the session. You can watch a recording of the session below, or you can click here to book into our next installment of ‘The Insider’ session.
Past performance is not a reliable indicator of future performance.
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