The winners and losers of 2020

The winners and losers of 2020

Winners: Tech stocks Amid the chaos of one of the most volatile years on record, the clear winner was tech. The 43.39% delivered by the tech-dominated Nasdaq told its own story. Lockdown greatly boosted the fortunes of the established “Faangs” (Facebook, Amazon, Apple, Netflix, Google et al.) and installed new champions, like Zoom. But the stand-out story was about green tech and future transport. Having started the year as the most shorted stock on Wall Street, Tesla shares “skyrocketed” by 582%. The carmaker’s stock remains “as polarising as its founder”, Elon Musk, said Daniel Howley on Yahoo Finance. Plenty are still betting its “lofty valuation will soon come crashing down”.

China With first mover advantage in the pandemic, China had regained “all of its lost momentum” by the end of the year, said Bloomberg. In October, the combined Shanghai and Shenzhen markets hit a record value of over $10trn – despite political and trade aggro with the West. China’s recovery had a welcome knockon effect on battered commodity prices, such as iron ore and oil.

Bitcoin The cryptocurrency went “off on one of its wild rides again”, said John Stepek on MoneyWeek, hitting a new record of $23,000 a piece before Christmas. We’ve been here before, in 2017. But this time institutional investors bought the story – viewing bitcoin as a “hedge” to monetary and market risks. Its future is still shrouded in doubt, but in 2020 the screaming toddler came of age.

Losers: UK shares A big question for investors at the start of the year was: should I invest in UK shares? Arguably, there was good value to be had: the relatively poor performance of the UK stock market meant prices were historically cheap – even allowing for Brexit. Moreover, after years of dominance it was surely time that “growth” stocks (such as tech – not a FTSE 100 forte) gave way cyclically to “value”. All that may still happen – but we’re still waiting. As of mid-December, the FTSE 100 was down by 12.95% on the year, the FTSE 250 by 7.21%.

Savers (again) Covid made us a nation of savers. The household income/savings ratio surged to an unheard of 29.1% during lockdown. But ultra-low interest rates meant anyone simply stashing cash lost out. The BoE rate fell to 0.1% amid talk of a move into negative rates. “Bond markets have also set records, albeit in a way that threatens to make life even harder for savers,” said Mark Gilbert on Bloomberg. “The world’s stock of debt that yields less than zero has soared past $18trn, more than double the amount at the start of 2019.”

Old goliaths Covid laid low some of the most august names in business. Perhaps the most eye-catching was Rolls-Royce, whose stock plunged by around 80% this year. The value of Britain’s flagship defence contractor – worth £24bn in 2014 – had sunk to around £3.8bn by October, said the Daily Mail – barely more than Games Workshop, “a firm making tiny toy warriors”.

 

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