Outlook 2020 – Q3

In the midst of one of the most serious health and economic crises in its history, the world will have experienced an unprecedented situation this spring, the longterm effects of which are hardly tangible. And what’s more, it is far from being over.

So far, the pandemic has claimed nearly 600,000 lives and more than 14 million people have been infected. Having said that, the confusion at the start of the epidemic episode gradually gave way to relief thanks to the easing of lockdown restrictions and the reopening of the economy.

But caution remains the order of the day, because as the number of new cases recorded per day – peaking at 219,000 at the time of writing – the rate of transmission is not slowing down even though the number of patients tested is much higher than at the start of the quarter. This goes to show that the situation is not yet completely under control.


Overall, the second quarter was marked by a strong rebound in equities and risky assets. The trend seems to have completely reversed after the confirmation of the launch of government aid programmes. Equities anticipate a V-shaped recovery in the economy and are driven by the abundance of liquidity and low short and long rates.

However, the recovery was not the same for all indices. The United States benefited the most from the rebound. The S&P 500 index posted a total performance of -0.53% since the start of the year against -1.31% for the SMI and -10.57% for the STOXX 600. Since their lowest level recorded in March, the S&P 500 has gained 43.19%, the SMI 27.95% and the STOXX 600 32.71%.

In this context, the American and Swiss markets fared better than the European market. This difference was mainly fuelled by the sectoral nature of this rebound, with health and technology having been the big winners. With having nearly 40% of companies active in the health sector, we can better understand how the SMI benefited from this rebound.

The United States, for its part, profited from the explosion of the technological sector with the GAFAM (Goog-le – Amazon – Facebook – Apple – Microsoft). These companies have shown how resilient their business model was during this crisis. The lockdown has also favoured online consumption and teleworking.

The players with a model focused on digitalised consumption with controlled logistics have therefore been the big winners on the consumption side. In addition, lockdown has accelerated the transition to the cloud and dematerialised and nomadic work. Chinese stocks have also been very resilient.

The Shanghai Composite, which has posted a performance of 20% since the start of the year, has rebounded by 29%. Another good reason to believe in the potential of China. Margin growth should continue and valu-ations are very attractive. Compared to the United States, Chinese equities are trading around 13 times earnings, compared to 22 times for US equities.

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