A near 30% rally from the lows of early March to the peak on 1st June has been characterised by a fierce debate between investors over cyclicals versus defensives. We feel this misses the point of the rally entirely.
The recovery in valuations has been confined largely to two big sectors: financials and mining. Both reflect a recovery in risk appetite by investors and that financial disaster has been averted through massive state intervention and a re-opening of M&A activity, which when combined, are allowing the banks to repair their balance sheets. While this has been great news for the market, it only gets most share prices back to where they were at the start of the year. Most ‘cyclical’ sectors have barely moved. Industries such as media, IT and consumer discretionary are trading on valuat...
To continue reading this article...
Join Investment Week for free
Signup and gain exclusive members-only insights - all free of charge!
- Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
- Get ahead of regulatory and technological changes affecting fund management
- Important and breaking news stories selected by the editors delivered straight to your inbox each day
- Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
- Be the first to hear about our extensive events schedule and awards programmes
