Elections around the corner - How is NZX entering October 2020? Few Sectors to look out for

Summary

• Prime Minister Jacinda Ardern received worldwide praise for better handling of the virus, as NZ managed to safeguard itself from the harsh effects of the pandemic to some extent.
• However, COVID-19 induced strict restrictions impacted the economy, and in this shaken economy, NZ is all set to have elections in October 2020.
• The New Zealand Exchange remained resilient during COVID-19 crisis due to better handling of Global Virus Crisis and in April it sharply recovered from the initial impacts.
• Few sectors to look for during the NZ election 2020 are – technology, capital goods, and healthcare.

The year 2020 till now has been under the grasp of the COVID-19 crisis. The coronavirus stricken world is looking for an effective treatment for the virus to restore both health and the economy. The virus, which originated at Wuhan city of China, in December last year gradually spread across the world and unfolded devastating effects in different parts of the world.

That said, NZ has a different story, as the country received worldwide praise for the superb handling of the crisis during its first phase. Prime Minister Jacinda Ardern's prompt decision of lockdown during the onset of the pandemic had a significant impact and NZ could safeguard itself from the harsh effects of the virus to some extent.

NZ Election 2020 amid the COVID-19 crisis

Currently, Auckland is under Alert Level 2 with no restrictions on social gatherings, tangihanga, and funerals. However, while travelling through Auckland, which comprises of coming to Auckland and going elsewhere from there requires wearing face masks. The remainder of New Zealand has been placed under Alert Level 1.

Did You Miss Reading; Alert Level 2 in Auckland, Alert Level 1 in rest of the country

Ever since the charismatic Jacinda Ardern became the Prime Minister in the year 2017, she has been a popular Prime Minister who is appreciated in the country and worldwide. Back in 2017, Kiwis were under the spell of ‘Jacindamania’ and followers used to cheer everywhere for the popular leader - be it in the halls, pubs, and stadiums.

Despite, Ardern's capable leadership, presently, the mania seems to have vanished amid the coronavirus crisis. The atmosphere has entirely changed with candidates wearing face masks who elbow-bump local people.

Labour Party led by PM Jacinda Ardern and Judith Collin’s National Party are competing in this peculiar year packed with economic concerns, triggered by the pandemic.

Must read: Election 2020 and Stock Market Trends to Watch

How is NZX entering October 2020?

The New Zealand stock market remained resilient due to better handling of the crisis. The government also ensured that the investments focused on helping primary sectors and SMEs. Furthermore, budget 2020 focused more on job creation for Kiwis.

Also read: Budget 2020: Additional NZD 160m funding to the pharma industry

If we look at the S&P NZX 50 index performance since February 2020, by April the stock market recovered well from the initial shock of the pandemic. Also, in April 2020, the same index gained 6.1 per cent. Until, August 2020, the index kept on gaining, but in September 2020, it lost 0.38 per cent.

Must read: 10 NZ Stocks Under the Scanner: September 2020 Watchlist

Be ready for a safer voting place during the upcoming elections

Image Source: © Kalkine Group 2020, data source: vote.nz

Few Sectors to look out for during the upcoming period

Technology sector: Technology advancement proved to be a boon during the challenging period of the COVID-19. The businesses across the world could function and shift all its operations online due to the sophisticated technologies like cloud computing and video conferencing. Even the election processes are utilising the technology for the candidates' promotion.

The COVID-19 uprooted the old ways of living and made people shift to the next phase of digitalised world. Despite the prevailing challenging circumstances, it has been amazing to see how quick tech businesses have moved the work activities online.

Also read: Coronavirus Crisis Raises Debate On Changing Tax Laws For Foreign Tech Companies

Let’s take a peek at the two technology stocks and their performances:

• Serko Limited (NZX:SKO) has given positive return of 20.27 per cent in the past one month and 11.36 per cent in the last one year.
• Rakon Limited (NZX:RAK)has provided positive return by 5.13 per cent in the past one month and 51.85 per cent in the last one year.

Capital goods: With elections in near future, another sector to look at is capital goods. These include the physical capital assets bought by producers of goods and services such as general-purpose machinery, furniture, computer equipment, domestic appliances, television and radio transmitters, agricultural and forestry equipment, measuring testing and navigating instruments, machinery for mining quarrying and construction, medical and surgical equipment, pumping and compressing equipment.

Let's see how some of the stocks in the related sector have performed:

• Fletcher Building Limited (NZX:FBU) has been up by 8.08 per cent in the past one month and down by 22.71 per cent in the last one year period.
• Metro Performance Glass Limited (NZX:MPG) has been up by 32.61 per cent in the past one month and down by 14.08 per cent in the last one year.
• Mercer Group Limited (NZX: MGL) has been up by40 per cent in the last one month and 150 per cent across last one year period.

Healthcare sector: Healthcare sector came under the spotlight during the COVID-19 crisis. The pharma companies are working 24x7 to create an effective vaccine for the relentless virus.

Also, Labour Party leader Jacinda Ardern and health spokesman Chris Hipkins made it clear by releasing the party's health policy in Auckland that they were concerned about primary and intermediate student's mental health support. The party intends to infuse a lot of money for the cause.

Let's have a look at the few stocks related to healthcare and how they are performing:

• Summerset Group Holdings Limited (NZX:SUM) has given a positive return of 4.29 per cent in the last month and 38.31 per cent in last one year period.
• Arvida Group Limited (NZX:ARV) has been up by56 per cent in the last one month and 17.12 per cent in last one year timeframe.