Coronavirus News Asia

Stocks rebound prompts fears of a looming bubble


Slowly but steadily coronavirus is becoming a thing of the past. Countries are easing quarantine measures and opening their economies. Meanwhile, stock markets are rebounding with the technology-heavy Nasdaq reaching all-time highs.

Some believe that investors have been encouraged by the promise of a rapid rebound as soon as 2021. Others suggest it was due to the greed and the fear of missing out (FOMO), citing the example of Bitcoin at the end of 2017. From November 12 to December 16, the price of the digital coin grew over 240% and hit nearly $20,000, but after that fell over 65% (back to $6000) in one month and a half. Its dominance, on the other hand, fell from 71% to 36.52% from December 17 2017 to January 14, 2018.

www.tradingview.com

In order to understand if the situation is similar to the stock market, it is important to analyze the reasons behind the recent rally. 

https://www.isabelnet.com/share-of-sp-500s-total-market-value-five-biggest-stocks/

First thing first, according to The Wall Street Journal, the FAANG stocks — Facebook, Amazon, Apple, Netflix, and Alphabet– since March 16 of this year, grew 62.08%, 56.73%, 45.68%, 45.39% and 36.51% correspondingly. The market capitalization of the five largest companies now accounts for 20.4% of the S&P 500 total and has nearly doubled since 2013.

www.tradingview.com

It might appear at first sight that we have yet another bubble. But we are here to analyze not just assume.

Amazon

Due to the mandatory quarantine, consumers had to rely more on online shopping, social media use, teleconferencing, and streaming of videos and movies. 

According to the European Parliamentary Research Service, online marketplaces currently account for 56% of online sales and will attain 67% of global e-commerce sales by 2022. The main e-commerce marketplace players are Chinese (Taobao, Alibaba, JD.com) or American (Amazon, eBay). Amazon is believed to be the driving force behind the 39% share of all e-commerce sales in the US. It has surpassed Walmart as the world’s largest retailer.

A similar trend is observed in cashless payments, on-demand delivery services related to fresh produce, online education, and social engagement platforms from gaming to OTT platforms, online collaborative tools, e-pharmacies, cloud computing, and even online consultations.

Overall, the coronavirus crisis has increased digitization in the supply chain. Eventually, it will remove some of the inefficiencies that exist and at the same time add value for retailers.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *