Don’t be a slaughtered pig in the bull and bear markets

Ben Kwok December 30, 2020 10:04

A famous Wall Street saying goes, “Bulls make money, bears make money, pigs get slaughtered”.

This seems to be true. Some investors, despite being physically restrained under Covid-19, are actually better off financially this year.

It is not difficult to understand why people would still make money in bad times. For one thing, global governments have launched stimulating measures and maintained a low interest rate environment, both favorable for stock markets.

As such, both United States and China - the two largest economies - have seen a strong performance in equities. In particularly, Nasdaq led all major equity indexes with a 40 per cent gain to reach a record high.

Likewise the North Asia markets – Japan, Korea and Taiwan –have done well, thanks to the robust electronic sectors such as semi-conductor.

Here in Hong Kong, despite a six per cent drop year-to-date in the broad blue-chip index, individual sectors produced spectacular returns since summer.

The new Hang Seng Tech Index – dominated by ATMX (Alibaba, Tencent, Meituan and Xiaomi) – recorded notable gains, save for the recent pullback of Alibaba.

Investors throw money on the “Work From Home” concept stocks on belief that Covid-19 will speed up the process of digitalization in China, as well as other parts of the world.

Of course there are more companies that suffered from Covid than beneficiaries. Retail, hotel and transport sectors are victims of people staying home and not travelling. Meanwhile, property and financial sectors are no longer the stars of the market.

Well, how stocks will perform next year is still anybody’s guess.

Optimists would see a strong rebound in world economies with vaccines but even so they could not tell if it would take months, or even years, to combat the virus which has seen no sign of slowdown all over the world.

And China is still the place to watch for next year. The economy has been surprisingly robust after Beijing took a decisive approach to block the virus spread since the first quarter. As it turns out, China is the only economy with GDP growth this year because it is one of the first countries to put Covid-19 under control.

Making money is never easy in an unstable stage and age but look, many people are still making money this year.

Good luck!

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Ben Kwok

EJ Insight writer

Hong Kong

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