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What New Virus Strain Means for Traders

What New Virus Strain Means for Traders

Updated

What happened?

A new Covid-19 variant has been found in South Africa and Botswana. The World Health Organization named it ‘omicron’ and added it to the variants of concern. Many countries have closed their borders for travellers from South Africa amid concerns that omicron can trigger another Covid-19 resurgence.

What are the risks?

Researchers don’t know for sure yet whether the current vaccines are sufficiently effective against omicron or not. Investors concern that it may slow down the reopening of economies and force central banks to switch back to the dovish policy.

What was the market reaction?

On Friday, markets fell sharply on news of a new coronavirus variant detected in South Africa that might pause the global economic recovery.

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What to do now?

With the market uncertainty and possible travel restrictions, it’s a good idea to brush off the list of companies that outperformed their peers amid the pandemic last year. Let’s then do it!

Retail/e-commerce

Amazon (AMZN), eBay (EBAY), and Walmart (WMT) can gain from both the return of Covid-19 restrictions and the upcoming New Year holidays.

Companies with a strong balance sheet

Companies with solid balance sheets and regular dividend payments will grow no matter what: with or without Covid. Among them are Microsoft and Google (Alphabet).

Biopharma

Biotech companies whose vaccines show the best efficacy against the new mutations of the virus will win. For example, Moderna has already announced that an omicron variant vaccine could be ready in early 2022! Will we see it at $400 soon again?

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