Stay at home stock theme to remain?

By Giles Coghlan, Chief Currency Analyst at HYCM

Buy Netflix and chill?

The outbreak of COVID-19 has understandably limited what people can do. However, some activities have dominated most people’s lives. Watching TV, buying food, going for some exercise, communicating via zoom and a spot of DIY have all been the main themes for many people. These behaviour changes have resulted in the rise of the so-called ‘stay at home’ stocks. These stay at home stocks, chosen by SocGen strategists, are in the new ‘home, work, and play’ categories such as online entertainment, food delivery, electronic and online communication as well as household products.

The stay at home portfolio looks for a positive year

This so-called ‘stay at home’ portfolio has currently risen by around 26% from its March 12 low. This is compared to only a 19% rise in the Stoxx 600 as a whole. In fact, as of yesterday and according to Bloomberg, the ‘stay at home’ portfolio was merely 1 percentage point away from breaking into positive territory for the year even though the broader market is still down around 16%.

Will this behaviour last?

It seems that investors are not expecting a huge behaviour change even as lockdown measures begin to ease across Europe. Yesterday the lifting of more restrictions was announced from the Netherlands the UK as well as Greece allowing visitors to form more nations to visit the country from June 15. However, it seems that the stay at home portfolio looks set to gain further as consumer behaviour gradually changes rather than an instant return to post COVID-19 normality.

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