Three Years On: Who Won From Covid-19?

Some sectors have surprisingly taken to top spot, but in the current environment, it looks difficult to know which calls the shots

Jocelyn Jovene 29 November, 2022 | 9:53AM
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Dart board

Benjamin Graham used to say that, over the short run, markets are a voting machine, but over the long run, they are a weighing machine.  

To that end we have looked at the performance of European markets and sectors over the last three years, marking the anniversary of the likely arrival of Covid-19 in Europe in December. Are there clear winners and losers across sectors or styles? Absolutely.

If we look at sector performance over the period since end of 2019, Basic Resources, Energy (oil & gas), and Chemicals have so far performed the best, followed by Technology and Health Care. Industrials and Consumer Staples have also held their ground relatively well. 

Real Estate, Retail, Travel & Leisure and Telecommunications, meanwhile, haven’t recouped the losses suffered since the end of 2019 (table 1). Banks and Food & Beverage were barely positive. 

The Covid-19 pandemic provoked a sharp but brief recession, which was followed by a solid recovery globally, but it also led to hardships in global supply chains and to lasting inflationary pressure. The corresponding surge in commodity and energy prices was subsequently fueled by the war in Ukraine.  

Long to acknowledge the not-so-temporary surge in inflation, central banks were compelled to tighten their monetary policies at a faster pace than they would probably have preferred. 

Under this backdrop, equity valuation multiples declined and sector and style dispersion increased. European large caps underperformed during the lockdownsand when the vaccines started getting released, but small caps outperformed on both occasions. 

That trend reversed this year, when large caps started outperforming the broader market, while small caps underperformed. 

Style-wise, the pandemic provoked a reversal of fortune for value and growth stocks, with the lockdown and recovery phase profiting mostly to growth companies.  

The latter period has seen a value comeback, helped by the outperformance of energy and basic resources sectors, and to a lesser extent by insurance and banks. 


Three years is probably not a long enough time frame to determine if some sectors will be clear winners over a longer period of time.

The war in Ukraine makes things even more complicated. The situation in China, where the Covid-19 crisis continues politically and socially, doesn’t help either. 

There are far more uncertainties and that makes it difficult to know if the world economy will indeed fall into a recession.

Looking at the recent performance of equity markets only adds to the confusion. In most developed countries, unemployment rate is currently pretty low, but it could rise if the economy tanks.  Financial conditions are tighter than even a year ago too.

Capital is getting scarce and will probably go in priority to industries considered most able to grow in a sustainable fashion while still generating high returns on capital. 

Indeed, we are in the "strangest business cycle in living memory", to quote a famous newspaper, and it’s far from over yet. 

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Jocelyn Jovene

Jocelyn Jovene  is Senior Financial Analyst and Senior Editor for Morningstar France.

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