The stock year 2020 should already have a place in history. The stock exchanges have seldom seen such sharp falls in prices as this year. The trigger was an exogenous shock called Sars-CoV-2, the coronavirus that spreads worldwide and can lead to the sometimes fatal respiratory disease Covid-19. The German share index Dax, for example, fell from its all-time high of 13,789 points on February 19 by almost 40 percent to 8,441 points within a month.
“All over the world, governments and central banks are trying to counteract the economic consequences of the Covid 19 pandemic with unprecedented economic stimulus packages and emergency loans, as well as key interest rate cuts and bond purchase programs,” wrote Deutsche Börse in its report for the first half of 2020 – measures that have been effective on the equity side. After lows in March, numerous stock markets more than made up for their losses by the end of the year.
The S&P Developed BMI market index of the industrialized countries from the provider S&P Dow Jones increased by a good 16 percent from the beginning of the year to mid-December 2020. As a result, a broadly diversified equity investment produced good results this year too, with extreme price fluctuations. The front runner is Denmark; the S&P Denmark share index recorded an increase of 39.5 percent. One reason for the strong performance are stocks from the health sector, such as pharmaceutical stocks, which have risen significantly with the spread of the virus and which are strongly represented in S&P Denmark.
It is followed by the significantly larger South Korea with a price gain of around 38 percent for S&P South Korea. The index provider classifies the country as an industrialized country, unlike its big competitors MSCI and Stoxx. These assign South Korea to the emerging countries. Shares from the IT and consumer electronics fields, for example, posted significant price gains. In addition, the country has suffered less economically than many other countries in the course of efforts to contain Covid-19.
The latter also applies to Sweden, which is in third place. The corresponding S&P share index rose by almost 32 percent by mid-December. Similar to the previous year, other small countries followed with the Netherlands and New Zealand. Their S&P indices recorded price increases of 28.3 percent and 27.4 percent respectively.
Technology stocks, among other things, had a major impact on performance on the Dutch stock market. In New Zealand, multiple cuts in the key rate after the corona-related economic slump have supported rates. The largest minus within the industrialized nations, 8.4 percent, is recorded by the S&P United Kingdom. According to stock analysts and economists, the tough negotiations over future relations with the EU are one of the factors affecting the book.
As in the previous year, companies from the IT sector are ahead in the industry comparison, both in the developed and in the emerging countries. The S&P Developed BMI Information Technology sector index rose by 42.4 percent over the course of the year, and the S&P Emerging BMI counterpart in emerging countries by as much as 50.5 percent. The IT sector benefits, among other things, from the accelerated digitization and mechanization in all areas of life in the course of the effort to contain Covid-19.
The non-basic consumer goods sector, such as luxury items and automobiles, follows in the industrialized countries with an increase of around 33 percent and in the emerging markets of 39.5 percent by mid-December. In third place in the industrialized countries is communications services, whose shares have risen by an average of 24 percent. In the emerging markets, the healthcare sector occupies the same place with a price increase of 36.6 percent, thanks to Corona. The coming stock year will also be accompanied by this topic, with ongoing uncertainty, according to analysts. Nevertheless, it is then increasingly about the time after Sars-CoV-2.