Wednesday May 25, 2022

Looking back on your action: markets stle like on a swing

The stock markets move it like a swing for five hours. One day up, the other down. Gradually take a new breath. For most of the action, the values ​​slowly return to the level of July. But this is not the case in all cases. It is now possible to take a look at the development of various stock sectors in the last month.

Z in the sense of commodity actions
The main word was taken by the so-called commodity stocks, where the rise in commodity prices in recent weeks had a significant effect. For the last month, the STOXX Basic Resources index rose 15.9% and the STOXX Oil & Gas index 7.5%. The highest returns were recorded by shares of companies engaged in gold, silver and coal. AMEX Gold Bugs was very popular among investors at 23%, Silver Mining even at 28.5% and Global Coal reported a low return of more than 25%.

Graph of the development of the AMEX Gold Bugs index over the last five years

Source: Bloomberg

With the threat of a cooling of the US and the global economy, technological stocks have spoken out, according to them. The STOXX Technology index jumped 6.3% over the last month. Similarly, the AMEX Biotech index is often added to the portfolio with six percent. This has been the case with some specific sectors, such as shipbuilding or solar stocks. In the regional network, the phenomenon of utilities and infrastructure in developing markets is very interesting. Less than 18% wrote to you DAXglobal Asia Infrastructure.

The mortgage crisis has affected banks and construction companies

On the other side of the results of the charter, we find in a global comparison the sectors of finance and construction. The STOXX Banks index depreciated by -2.8% and the barometer share of construction companies STOXX Construction -2.2%.

Shares in the USA and Japan hit the worst. S&P Homebuilding lost just -11.9% in the past, and if we look at its value a year ago, we find that this index fell by more than -40%.

On the other side of the Pacific valuation, in the land of the rising sun, the shares of the financial sector fell very sharply. Banking stocks included in the TOPIX Banks index fell by an average of -12.5% ​​per month and the loss per year is slightly below -30%.

The graph introduces the TOPIX Banks index for the last pt years

Source: Bloomberg

The mortgage crisis in the US is far from over. The situation in construction and finance is still developing in an unfavorable direction. Paradoxically, in those weeks and months, the shares of large banks will not be unstable, as is often the case.

Similarly, investors should rather avoid real estate stocks and so-called REITs, especially in the USA, Great Britain, Australia and other regions, where it has long been talked about bubbles. Conversely, in some emerging markets (eg Turkey), real estate stocks may be a potentially very interesting investment.

Technology promises interesting profits

In the long run, the technology sector can be recommended. Personally, I promise the most from biotechnology and from the industry I deal with micro systems – so-called nanotechnology. New and new non-traditional thorn segments are appearing for connoisseurs today, and it is possible to speculate on their superiority compared to the entire market. One of them is the construction of a ship. Recently, an index of stocks from the action of companies operating rail transport appeared on the market. Three ethical and ecological investments, from solar energy to drinking water and to waste management, are very popular.

The cheapest are “oil stocks”

From the point of view of valuing the event by the price-to-profit ratio, it continues to be a very promising phenomenon of the company associated with you and the processing of oil. If the price of oil rises, then this investment will make attractive profits in the medium and long term. However, bank shares can also be generally described as “cheap”. If in five months there are problems with mortgages and investors’ fears about the stability of some large international banking groups, then even this investment has a period of 1-3 years of outperformance compared to the entire market.

Telecommunications maintain stability

If you are looking for the stability of stock investments, you should look for telecommunications in the coming days. In recent years, they have been characterized by relatively low volatility and at the same time offer some of the highest dividends. This is also the case in the basins, respectively in the entire Central European region. Telecommunications stocks, for example, are a regular tool for rents, having at their disposal in the chapter from which they want to draw a regular rents.

Structure, structure, structure…
If you are watching a little development in the stock markets, or if you are at least careful to read this article, then you must tell me right in one. Developments in recent weeks have shown how important it is to structure investments on a regional and sectoral level.

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