TOKYO, Sept. 23, 2020 (GLOBE NEWSWIRE) -- Okuras Global Capital, a respected wealth management company, is expecting a unique segment of the stock market to rally the most on a COVID-19 vaccine.

As the world awaits the delivery of an effective COVID-19 vaccine, investors are anticipating which stocks will make a profit following this impending development. Although many wealth managers are pointing to cyclical stocks as the primary beneficiaries of a COVID-19 vaccine, Okuras Global Capital, is recommending value stocks.

According to Okuras Global Capital researchers, the prevailing thoughts are leaning towards that the worst-hit stocks like hotels, airlines, restaurants, and casinos will benefit the most from a vaccine, as the economy finally reopens and consumers get out and spend their money. However, the latest performance trends are indicating otherwise.

The likelihood of a widely distributed COVID-19 vaccine surged by 30 per cent between August 22 and September 8. During that same period, cyclical stocks underperformed defensive stocks, while value stocks outperformed growth stocks by more than 3 per cent.

"Cyclical stocks lagging while vaccine prospects improve is not what most investors would have anticipated," said Higuchi Kyuwa, Group Head of Research at Okuras Global Capital.

"The reason for the moves is that today's value stocks will experience the sharpest rebounds in earnings estimates as soon as investors regain confidence on the path to normalisation," he added.

Mr Kyuwa continued, "When thinking about where earnings are likely to rebound after the delivery of a successful vaccine, the traditional economic sensitivity of an industry is less relevant."

Adding fuel to the possible fire of value stocks, anticipated post-vaccine rally is the fact that value stocks trade at their highest discount to growth stocks since the tech bubble. This gap represents the potential energy for value stocks to outperform with the right driving force generating a rotation.

So, should investors shift their focus from growth to value stocks? According to Mr Kyuwa, "it would depend on their investment time horizon."

"We expect investors will continue to prize growth in the medium term during this lower-for-longer interest rate environment," Higuchi Kyuwa, Okuras Global Capital's Group Head of Research concluded.

Low interest rates should continue to be a tailwind for growth stocks, and with the Fed's latest commentary indicating interest rates will remain low for years to come, do not expect this trend to finish.

About Okuras Global Capital

Incorporated in 2014, Okuras Global Capital provides wealth management solutions to individual and corporate clients across the globe from its headquarters in the heart of Tokyo, Japan.

Contacts

Mr. Higuchi Kyuwa, Group Head of Research

Switchboard +81-3-4590-0730 | Email higuchi.kyuwa@okuras-global.capital  

Address: 38F Shinjuku i-Land Tower, 6 Chome-5-1 Nishishinjuku, Tokyo, Japan.