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Analysis-The great British reopening: how investors are picking their bets

Please try another search Economy1 hour ago (Jun 10, 2021 01:21AM ET) 3/3 © Reuters. FILE PHOTO: People walk across the Golden Jubilee Bridge during sunny weather, amid the coronavirus disease (COVID-19) outbreak, in London, Britain, June 5, 2021. REUTERS/Henry Nicholls/File Photo 2/3 By Tommy Wilkes and Joice Alves LONDON (Reuters) – Cinema tickets, traffic…


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Analysis-The great British reopening: how investors are picking their bets© Reuters. FILE PHOTO: People walk across the Golden Jubilee Bridge during sunny weather, amid the coronavirus disease (COVID-19) outbreak, in London, Britain, June 5, 2021. REUTERS/Henry Nicholls/File Photo

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By Tommy Wilkes and Joice Alves

LONDON (Reuters) – Cinema tickets, traffic jams, workplace footfall, internet conferencing, even private jet leasing: investors are parsing motley metrics for clues about how to earn money every time a major economy reopens.

Britain’s blistering COVID-19 vaccine rollout is assisting its economy open quicker than much of continental Europe, possibly giving a blueprint for investors attempting to map how the recovery transaction will play out throughout the remainder of the area.

The United Kingdom has been slowly loosening restrictions, with a lot of the nation set to completely reopen on June 21, and customers who’ve gathered savings during lockdowns are starting to spend.

As a consequence, international investors who had largely shunned UK stocks since the 2016 Brexit referendum are back; they now hold the largest British”overweight” – their UK share holdings relative to Britain’s dimension in global equity benchmarks – in seven decades, BofA’s yearly survey of fund managers reveals.

“The UK suffered disproportionately from the lockdown, and is now rebounding stronger and faster than other countries in Europe,” said Kasper Elmgreen, head of equities at Amundi, Europe’s biggest fund manager.

But how are investors choosing their stakes?

They have turned to various indicators including traffic congestion and flight action. Based on those and other metrics, Amundi figures that shares in retail, budget airlines, media and drink companies have additional room to run.

British cinemas offer early information also.

They reopened between May 17 and May 24, and box office takings towards the end of that month topped 25 million pounds ($35 million), according to the UK Cinema Association. That compares with 16.6 million for the entire month of May in 2019, before the pandemic upended regular life.

DRINK IN THE SUN

Investment banks will also be compiling data to guide clients’ decisions.

Jefferies (NYSE:-RRB-, for instance, said its proprietary consumer behaviour gauge found that the e-commerce and web-conferencing sub-indexes – so mighty as people sequestered themselves at home – had slipped off recent highs. Meanwhile public transport use rose 11 percentage points to 118% of pre-COVID levels in the week to June 8, while traffic congestion hit 107%.

Based on such data, the bank advised clients to buy shares in cinema group Cineworld and casual dining chain The Restaurant Group – already up 46% and 98% respectively in 2021, though still down about 50% and 18% on their pre-pandemic prices.

“Sustained high levels in web traffic to land portals leads us to also recommend home-improvement plays, like Kingfisher (LON:-RRB- and Travis Perkins (LON:-RRB-,” Jefferies added.

The reopening hopes, alongside the summer weather, have also boosted hard-hit hospitality sector shares such as pub groups Mitchells and Butler and Wetherspoons.

Fitness subscription app ClassPass, meanwhile, reported that new memberships in Britain rose 600% in the week to May 24, with London one of its fastest-recovering markets across the 30 countries where it operates.

‘STARTING TO BOOM’

More than half of British adults have had two vaccine doses, double the percentage seen in many euro zone countries.

Mobility numbers, real-time consumer and business surveys and pub companies’ weekly customer data indicate Britain”is already starting to boom”, said Phil Milburn, co-manager of Liontrust’s Global Fixed Income Team.

Britain’s reopening is at least several weeks before the area, and Milburn views it as a portent of what lies in store for European business activity.

“We are seeing signs that the UK is taking off. The euro zone is behind but catching up fast,” he further added. “Consumer behaviour seems to be pretty similar across countries – once vaccinated people are happy to take risks.”

At 87percent of pre-COVID floors, Jefferies’ euro area economic activity indicator lags Britain’s 94percent but is growing, rising two percentage points over the past week.

In the United States, where reopening is much more advanced in some regions than in Britain, action has climbed to 97percent of pre-COVID levels.

Investors will also be watching Citi’s

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