The development of a number of COVID-19 vaccines has been a game-changer when it comes to investment markets. In my newsletter titled 'Through the looking-glass' I explained how following Pfizer's vaccine announcement on 9th November investors rushed to rotate out of everything that had worked well during the COVID-19 pandemic and buy everything that had lagged. The rotation was as aggressive as it was sudden.
The pre-vaccine 2020 winners became the ‘vaccine trade’s’ laggards. Within equity markets, technology and communication sectors lagged along with the likes of consumer staples. On the flipside, economically sensitive sectors, such as financials, consumer discretionary and energy soared. There has been a rotation from growth stocks to value stocks. But even at a company stock level, there were some big individual winners and losers. It also meant that there was some significant rotation at a geographical level in equities (money flowed into UK equities and emerging markets) but also between asset classes (as money flowed out of government debt and into riskier assets).
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