The recent coronavirus outbreak has strained financial markets – and has done so in a way that only a handful of major events in the last century can claim to have done. Yet amid increased market volatility, a few companies seem to have been faring even better than before, and for good reason.
The pandemic that shook the global markets
Both the outbreak and the lockdown measures that most governments were forced to take in order to contain the virus and mitigate its effects were conducive to a bear market across many sectors. Traders are proceeding with extreme caution and taking the widespread volatility into consideration when making decisions.
This has had a spillover effect in correlated sectors, such as options trading in the UK, the US, and other equally strong markets. Since financial options trade on the future value of a market, giving holders the right, but not the obligation to trade at a set price or before a set date, they have been severely affected by current wild fluctuations. These fluctuations determine prices and profit for both call options and put options, with traders keen to turn to hedging in order to limit losses across a volatile underlying market.
Amazon stocks skyrocket as demand for online retail soars
Yet it is not all bleak for the stock market: several companies have retained their strong positions amid the lockdown, and a few have even benefited from it. At one point in mid-April 2020, Amazon was reported to be making a staggering $11,000 per second, pushing its stocks to a record high and re-establishing Jeff Bezos, the company’s famous chief executive and founder, as the richest person in the world with an estimated wealth of $138bn. Around that same time, the online retail giant was valued at $1.14trn and its annual sales in 2020 are expected to rise to $335bn, representing an increase of almost 20%.
More companies set to benefit from the unexpected crisis
These figures should come as no surprise as the pandemic has forced people to stay at home in order to help save lives. Home delivery and online retail have seen an unprecedented surge in demand. Amazon and its Chinese counterpart Alibaba have long been regarded as pioneers in the sector, with a fine-tuned network of warehouses and delivery services that ensure that both are still running smoothly – although with slight delays in delivery due to increased demand.
As the lockdown continues, home entertainment services like Netflix are expected to increase their value, as customers turn to video streaming to pass the time. And with so many people now working from home, the tools offered by teleconferencing company Zoom are suddenly in high demand. In that same league with Zoom, educational platforms and remote working software companies are also in for a treat as the measures remain in place.
So if you are looking for good opportunities to invest, now is as good a time as any. The sectors that are set to benefit from the outbreak are few and far between, making it easier to predict stocks that are arguably poised to do well.