Over the weekend, G20 finance ministers said the economic recovery was at risk. Delta expressed its grave concern about the growing number of cases of coronavirus, among other things, US Treasury Secretary Janet Yellen, who has headed the US central bank for years.
What do the exchanges say? There have been no panic moves lately, despite growing concern among investors. However, this does not prevent, for example, breaking all records on Wall Street.
– Investors care, but I think it’s unnecessary. In fact, the longer the epidemic lasts, the better for the markets – notes Christian Primora, director of analysis and information at BDM Brokerage House.
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Attention is drawn to the quotes of Polish stock indices, in particular sWIG80 (groups of medium-sized companies), which are more than 30 percent. Earnings in 2020, is currently recording a similar rate of return. This result is clearly better than in the case of the larger companies of WIG20 and mWIG40.
– More than 30 percent of sWIG80’s capitalization is industrial companies found to be benefiting from the pandemic. It turns out that consumers have to spend money on something, and service restrictions have shifted demand towards industrial goods. Hence, for example, the relative strength of sWIG80 comes from, he explains.
Currently, the value of the sWIG80 index is about 70 percent. higher than at the beginning of 2020, that is, before the outbreak of the epidemic. Compared to mid-March 2020, this increase is close to 120%.
Fourth wave? There is another problem
The DM BDM expert believes that the fourth wave, even if we see it, will not be as severe as the third, and the decisions of the stewards should not be as radical as before.
Primora points out that the current increases in infections do not entail increases in the number of people in hospital, which is clearly visible in the UK.
It is also estimated that there is no high risk associated with an increase in disease in Asian countries.
In his opinion, the situation in the financial markets will remain good as long as central banks keep interest rates low (policy of cheap money and readily available loans). Expansionary monetary and fiscal policy is the basis of the current boom.
– The problem will start when everyone realizes that there is a lot of money in the economy and when it turns out that inflation is not at all temporary – warns Christian Primora.
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