Crucial role for vaccines in 2021 14-01-2021

New wave of Covid infections, but vaccination started

New variants of coronavirus are emerging almost everywhere around the world and infection rates have risen sharply again in recent weeks.

Many countries are announcing new, much tighter lockdown measures.

More and more vaccines are being approved. Vaccination has started, but may not get up to speed until the second quarter. Both the logistical challenge and producing sufficient doses are creating a bottleneck.

Sectors dependent on freedom of movement hit again

Lockdowns are again paralysing most of the leisure sector. Business confidence in the service sectors is declining sharply. On the other hand, the industrial sectors would appear to be suffering little inconvenience.

The rapid recovery in the third quarter of 2020 suggests that the economy will bounce back when mobility restrictions are eased again.

A broad range of support measures in Europe and in the US (after the Democrats gained control of the Senate) will – in tandem with very accommodative monetary policy – underpin the recovery.

Rollout of vaccinations brings 'normality' closer

Rising levels of infections have not affected stock markets in recent weeks. Even the 11th-hour Brexit deal and turbulent last days of the Trump administration failed to disrupt the markets.

Volatility on the financial markets remains a possibility. Even so, we continue to prepare our portfolios for the return to a normal situation following the vaccination rounds.

Within the stock component, we are opting mainly for sectors that will benefit from the economic recovery. We were particularly interested in the consumer sector, which includes growth segments like e-commerce, and in the leisure sector, where the recovery has yet to begin.

In the bond component, we are opting for corporate bonds and bonds issued by emerging market countries.

Besides this long-term vision, protection and trends on the financial markets are important aspects too. Your personal investment may have a different composition that takes account of your comfortzone.

Dirk Thiels, Senior Investment Strategist KBC Asset Management
Vaccination will help return the world to 'normality' in the course of 2021. Investing in shares that benefit from the related economic recovery is at the core of our investment strategy.

Editing ended on 14 January 2021. This document is a publication of KBC Asset Management NV (KBC AM). The information in it can be changed without notice and offers no guarantee for the future. Nothing in this document may be reproduced without the prior, express, written consent of KBC AM. This information is governed by the laws of Belgium and is subject to the exclusive jurisdiction of its courts.