Second wave has less impact
Despite ongoing lockdowns, short-time working and unemployment, investor optimism does not seem to be waning. Economic statistics actually indicate that people are coming to terms with coronavirus, or at least adapting to it.
During the first wave of coronavirus in the second quarter of 2020, economic output shrank in industrial countries by between 5 and 15 percent year-on-year. During the fourth quarter of 2020, when many countries were hit by a second wave and had to impose new lockdowns, very few countries and regions recorded negative growth. These included many European countries. The surveys conducted monthly also suggest that European consumers and companies are more restrained overall than their counterparts in Asia and the US.
The US government is providing huge stimulus packages to ward off another recession. Consumption remains strong despite high unemployment. Companies are extremely optimistic, and further fiscal packages are expected. The USA’s flexible economy also means it is well positioned for recovery. The US economy seems better placed than Europe’s in the short and medium term. As a result, we are positioning our portfolios with greater emphasis on US equity investments, at the expense of European ones.