How the world navigated the greatest contraction since 1930s

Feature
January 19, 2021 1:05 pm
Peter Garnry, Head of Equity Strategy, Saxo Bank

In a rollercoaster year that surprised analysts and market participants alike, US technology companies attracted the highest trading volumes among Saxo Bank investors in the UAE and around the world in 2020. The strict lockdowns and prolonged work-from-home trend which arose from the Covid-19 pandemic suited the business models of the US tech companies, reflected by the Nasdaq-100 being up more than 40% for 2020. 

EV-companies ruled supreme as the best performers of 2020, with Tesla up more than 640% and Nio also referred to as the Chinese Tesla skyrocketing by an astonishing 1069%.

This year was all about the online vs offline world as technology companies were catapulted into the future by the Covid-19 pandemic while many physical industries such as aviation, travel, leisure, hospitality and automobiles came under significant pressure due to the severe restrictions and lockdowns.

2020 will also be remembered for the rise of Tesla as its market value surged 646%, reaching a market value of $590 billion and ending the year as the biggest stock inclusion in the history of the S&P 500 Index. Part of the Tesla story was the increase in EV sales globally despite the pandemic and the rise of green transformation stocks highlighting a powerful new theme in financial markets.

Investors across the world turned to financial markets as net buyers following the March global stock market crash and historically swift recovery powered by the Federal Reserve pledge to shore up the economy. 

As the all-out stimulus to fight the biggest economic contraction since the 1930s quickly erased losses from late March, high levels of activity continued throughout 2020 and Saxo Bank welcomed more than 200,000 new clients throughout the year. 

The year will be remembered for the fastest equity market rebound in modern history, following a sharp 34% selloff in just 23 trading days during February and March, driven by aggressive policy action across the world.

Covid-19 has amplified the participation rate of retail investors in equity markets, a trend that was already underway before Covid-19 and mainly driven by younger people. The growing influence of retail traders has altered equity markets and created a new environment that has made it more difficult for traditional institutional investors to navigate.

Peter Garnry, Head of Equity Strategy, Saxo Bank
Peter Garnry, Head of Equity Strategy, Saxo Bank.

Key takeaways 

  • Saxo Bank welcomed more than 200,000 new clients throughout the year. 
  • US technology companies top list of most popular stocks amongst UAE investors in record-breaking year.
  • Tesla led Saxo Bank’s UAE list, followed by Apple, Nio, Microsoft, and Amazon.com.
  • 2020 will be remembered for the rise of Tesla as its market value surged 646%.
  • Tesla reached a market value of $590 billion, ending the year as the biggest stock inclusion in the history of the S&P 500 Index.
  • The year will be remembered for the fastest equity market rebound in modern history driven by aggressive policy action.
  • Covid-19 has amplified the participation rate of retail investors in equity markets.
  • The growing influence of retail traders has altered equity markets and created a new environment.

 

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