Navigating the recovery

Navigating the recovery

Investors need to distinguish businesses that are likely to perform well, as the world recovers from the virus, from those that will struggle.
In the first half of 2020, global stock markets experienced a significant fall and a rapid recovery. We believed they were supported in their recovery, which appeared dislocated from the underlying economic environment. As investors, we have holdings in the technology and healthcare sectors as both continued to benefit from structural trends and we believed the investment case around them had improved. In particular, many technology companies have been significantly boosted by the COVID-19 crisis, as our economies have accelerated the transition from physical to digital. There has been a significant diversion in sector performance, with technology and growth sectors leading the market’s rise.

The COVID-19 crisis has imposed a downturn unlike any other traditional economic cycle, with its stringent restrictions causing an acute and severe fall in demand in many sectors. We believe the recovery is likely to be different to previous ones, with a number of sectors permanently or temporarily impaired. Valuations have moved to reflect the new reality with significant discounts to typical levels of profitability. There is an opportunity to selectively start to invest in high-quality companies that are structurally sound but have been impacted negatively by the crisis. It is likely that the road to recovery could take two to three years as demand recovers to pre-crisis levels.

For those clients who have access to My Brown Shipley you can check your portfolio valuation online. If you have any questions, please contact your usual Brown Shipley adviser.


Amrendra Sinha
Group Head of Direct Equities

Daniele Antonucci
Chief Economist & Macro Strategist

Bill Street
Group Chief Investment Officer

Non-Independent Research

The information contained in this article is defined as non-independent research because it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research, including any prohibition on dealing ahead of the dissemination of this information.

How to Use this Information

This article contains general information only and is not intended to constitute financial or other professional advice or a recommendation that any recipient of this information should make any particular investment decision. Always consult a suitably qualified financial advisor on any specific financial matter or problem that you have.

Except insofar as liability under any statute cannot be excluded, neither Brown Shipley nor any employee or associate of them accepts any liability (whether arising in contract, tort, negligence or otherwise) for any error or omission in this article or for any resulting loss or damage whether direct, indirect, consequential or otherwise suffered by the recipient of this article.

Investment Risk

Investing in stocks either directly or indirectly carries investment risk. The value of equity based investments may go down as well as up over time due to factors such as, market volatility, interest rates, and general economic conditions.