Saikat Chatterjee and Danilo Masoni

LONDON, Reuters – This year has been exactly one. Pfizer (NYSE)’s breakthrough announcement on the experimental COVID-19 vaccination, but not from emerging markets or airline stocks. Many trades that had been expected to reap the benefits of economies reopening are now in decline.

Pfizer BioNTech announced on November 9, 2020 that the vaccine against COVID-19 had been more than 90% successful. This was a significant victory in the battle against the pandemic which has ravaged markets and caused recession around the globe.

This triggered an exuberance of betting on assets like emerging markets, value stocks and high yielding debt. These were the most affected by economies closing down due to the pandemic.

Now fast forward one year, and COVID-19 no longer concerns the majority of investors polled every month by BoFA analysts. However, markets are not following the same pattern.

1. STOCKS

COVID-19 proved to be the end for banks and energy. After years of low valuations, and bad growth prospects, COVID-19 brought down MSCI’s value index relative to MSCI Growth to an unprecedented low.

These include high-flying companies from the technology sector.

Pfizer’s vaccine had been seen as bringing about an increase in value. However, several wave after wave of growth turning to value have failed to materialize over the past year. The outcome: The MSCI Growth value index now stands at record lows, just a few points below the 2020 highs.

Global stocks increased by nearly $16 trillion last year, but this was largely due to tech. COVID may have impeded reopenings and the economic recovery. From 20% in a year ago, 24% now comes from tech.

Airline shares are prime vaccine recipients, but have fallen less than 20% in comparison to the 42% tech gains

Kenneth Broux (OTC:), a London strategist, said that the exuberance of Pfizer’s jab one-year ago was replaced by the aftershock of COVID supply chains, labour mismatch, and inflation anxiety.

The most severe underperformance can be seen in emerging equities, which gained only 7% after central banks raised interest rates to counter inflation. Tourism has also failed to recover.

For a related graphic on Value vs Growth, click https://fingfx.thomsonreuters.com/gfx/mkt/xmpjorreovr/value%20vs%20growth.PNG.

For a related graphic on world stocks, click https://fingfx.thomsonreuters.com/gfx/mkt/akpezmmxyvr/world%20stocks.JPG.

BONDS

Following the news about the vaccine, the largest losers were sovereign bonds. Over the subsequent year, however, Japanese and Swiss safe-haven bonds with low yields have seen returns, while Australia and Italy’s high-yielding loans suffered losses.

U.S., British, and German government 10-year borrowing costs have risen 40-65 basis point; U.S. yields could see the largest annual growth since 2013.

For a related graphic on Bonds, click https://fingfx.thomsonreuters.com/gfx/mkt/jnpwexxbbpw/bonds.JPG.

CURRENCIES

An oil price hike of over 100% has pushed the Canadian dollar and Norwegian crown up by 6% and 4.4%, respectively.

However, other currencies that are considered reflation bets like the Australian Dollar and the Euro have suffered from China’s economic slowdown. There is also evidence suggesting their central bank will tighten policies slowly.

The up 4.5% is the best year for emerging markets currencies since 2015.

Recently, currencies like the Thai baht that is tourism-oriented have seen their value increase. This has been possible because they no longer need zero-COVID vaccines.

For a related graphic, click https://fingfx.thomsonreuters.com/gfx/mkt/zgvomkkzyvd/EM%20currencies.JPG

CRYPTO

On Nov. 9, 2020, the coin lost its value. Its price dropped to $68,000. However, the cryptocurrency has shot up by 340% to nearly $68,000 since that time.

The price of Rivalether has risen by almost 1000%

These gains, however, are due to an abundance of liquidity from the central banks and government.

For arelated graphic on Bitcoin, click https://fingfx.thomsonreuters.com/gfx/mkt/gdpzyddbnvw/bitcoin.JPG.