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A jab away from normality? 25-02-2021

New Covid-19 wave is being brought under control thanks to vaccination programmes

New rise in infection rates that kicked off the new year is gradually being brought under control.

The new strict lockdown measures introduced in many countries are paying off.

More and more vaccines are being approved. Vaccination has started, with programmes in some countries getting off to a lightening start. In others, however, it probably won't be until the second quarter before they get up to speed. 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.

Wide-ranging support measures in Europe and in the US (where a huge new spending programme is on its way) will – in tandem with very accommodative monetary policy – underpin the recovery.

Rollout of vaccinations brings 'normality' closer

In recent weeks, stock markets have mainly been influenced by reassuring signals from the economy, relatively robust corporate results and the prospect of new stimulus measures in the US.

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 25 February 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.