Investment strategy
April 11, 2021

How to profit from COVID-driven market inefficiencies

April 11, 2021
David Bailin
Chief Investment Officer
Steven Wieting

There is only one COVID pandemic. Yet, world markets price different scenarios for the recovery from the virus across regions. This leaves opportunity for investors who can look beyond today's discordant news.

We believe that abundant vaccines and near-term reopening efforts will overcome economic divergence. In short, underperforming equity markets should catch up.

Forward-looking investors should be skeptical of today’s assumptions, including US COVID exceptionalism, which presumes that US equity outperformance will continue. We are bullish on the US growth outlook, but believe this is now significantly embedded in equity valuations.

A peak in US (and eventually European) vaccinations will send doses to the emerging world.

The Eurozone and Brazil are likely beneficiaries of a full COVID recovery, though markets doubt this. Other parts of Latin America and North Asia could lag for longer as COVID’s losers but even these will close the gap as 2022 unfolds.

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