Markets across the world have plunged as the coronavirus pandemic coupled with an ongoing oil price war causing investors to flee equities and values to plummet. In every crisis, however, there are companies that benefit; here are four sectors that investors should consider moving into as markets fall further:
Firms that deal in consumer staples sell essential products, such as food, drink, or household goods. Companies that specialize in delivery of goods, such as Amazon or Deliveroo, may also see a rise in deliveries as customers remain under quarantine. The caveat here, however, is that a rise in sales does not mean these companies are immune to the coronavirus shock.
“If this drags on for longer, say past this summer, it will cause a disruption in the supply chain and shipment services and delivery people might be restricted from moving from one place to another,” said Majd Dola, equity portfolio manager at First Abu Dhabi Bank.
Utilities are a classic defensive investment sector. Consumers will continue to need utility services, such as electricity, gas, and water, despite an ongoing crisis and as such will continue to pay their bills. While many countries institute stricter lockdown rules and borders close, utilities costs may even increase.
Like utilities, telecoms are a defensive investment. Customers will continue to need access to telephones and internet services even during a crisis. Some telecoms stocks have already fallen, however, such as Etisalat in the UAE. This is not necessarily indicative of a particular trend though, said Dola.
“[Telecoms] may be down, but it is a relative game, and we are in panic mode now so it’s hard to judge,” he said.
The coronavirus, officially known as COVID-19, has tested the healthcare services of countries around the world. In the UK, authorities have repeated the sentiment that the government’s approach to combatting the virus has been conducted in the context of ensuring the country’s National Health Service does not get overwhelmed.
Health has become a higher priority for consumers than it normally might be, giving the healthcare sector more attractiveness than normal to investors.