While you laze around in your living room, you realise that you have lost count of the number of the days left for the Easter holidays. While this forgetful nature appears shocking for most of us, but somehow, we seem to be sailing around in the same ship. With the national emergency imposed and the medical calamity coursing fear amongst the individuals, our plan for festive leisure activities flies out of the window. The wanderlust of the people had been stifled and choked long before, and now NZ citizens locked in their homes seems to adapt themselves with the novel social distancing culture eagerly.
Humans who always prided at their topmost position on the earth somehow seem perplexed as they stand helpless against the Covid-19. The pandemic with each passing day appears to take a gruesome form as thousands of people die, and innumerable infection cases are reported from the different regions across the world. As per the report on 31 March 2020 by WHO, the world has acknowledged a total of 697,244 cases and 33,257 deaths globally. What is even more shocking is the pace at which the pandemic was wreaking havoc as in the last 24 hours, the cases grew by 63,159, and the world saw 3464 addition in the death.
You do not need to be an expert to know that the financial volatility stands tall in the current times. On 21 February 2020, S&P/NZX 50 marked a new 52-week high at 12,064.864 and in less than 25 trading sessions the benchmark index registered a 52-week low at 5498.699 on 23 March 2020, a steep fall of 29.55%. The other world markets around the globe also witnessed a similar downfall. While the Dow Jones Industrial Average witnessed a fall of around 25%, the Australian S&P/ASX 200 plummeted by over 27% on a YTD basis.
The novel Covid-19 is inflicting harm on most of the sectors as the operations remain shut and the growth suspended. The travel and hospitality sector which extensively depended on the global interconnectivity in New Zealand seems famished amidst the long-imposed travel bans. The education industry also severely bears the brunt of the pandemic as the international students are not able to return from their home countries. Likewise, the luxury goods also have witnessed a decline in the demand as the people primarily shift to the conservative ideology.
However, many investors are eyeing the bearish wave as a lucrative opportunity to avail massive price bargains. However, the primary dilemma that perplexes them circles around the long-term prospect and profitability of the chosen sectors. With this backdrop, let us look at the attractive sectors which you can consider before you invest your hard-earned bucks amidst the turbulent time.
While the duration of the epidemic yet remains unclear, the surety lies regarding the basic needs of the individuals. The utilities catering to the fundamental requirements of the individuals often sustain their demand even in the midst of the crisis. The current market volatility leading to the downtrends favours the reliable long-term investment. The utilities sector known for providing a consistent income stream in the form of the dividends can be the saviour in times of crisis as you plan your long-term investment.
S&P/NZX All Utilities grew by over 32% in the year 2019 signifying positive growth prospects with income stability. Although the index plummeted by 17.76% on a YTD basis on 30 March 2029, owing to coronavirus downtrends, the safer long-term investment choices would align with the wavering stability. Mercury Energy Limited (NZX: MCY), the electric generation and retailing company has risen by over 8.4% in the past one year as on 30 March 2020. The company also provides a sustainable dividend yield of 5.131% as on 30 March 2020 closing price.
The medical emergency has created upheaval not only in economic stability but also on the day-to-day proceedings of the country. Yet, the sustenance of the healthcare sector is often guaranteed as the people do not have control over their health and when they fall ill. Realising the intrinsic nature of the business activities shielded from the market downturn, many investors vouch for the continued growth prospects. Furthermore, development in technology has opened further avenues to advance work in areas such as medical robots and smart devices.
While the coronavirus chokes the growth of NZ, it also exposes various pitfalls and shows the scope for improvement predominantly in the healthcare sector. The investments in the research and development for vaccines is likely to skyrocket, even after the medical emergency subsides. The health awareness of the individuals has escalated manifolds amidst the calamity, which could further provide a significant boost to the healthcare sector.
In the past year, healthcare has grown by over 30%. Due to the coronavirus setback, the index has barely moved with a down tick of just around 4.7% on a YTD basis, massively outperforming the benchmark index in the same time period. The healthcare equipment manufacturer and distributor, Fisher & Paykel Healthcare Corporation Limited (NZX: FPH) shares grew by 77.24% in past one-year period as on 30 March 2020. When due to Covid-19 the majority of the companies saw a downfall in their prices, FPH stock price consistently rose by 36.7% on a YTD basis, to close on $30.35 per share on 30 March 2020.
The real estate market of New Zealand due to its growing economy is experiencing continuously rising demand. In December 2019, the annual growth of NZ Gross Domestic product was 2.3% encompassing the quarterly growth of 0.5%. The house pricing has also surged, with Auckland and Christchurch having high housing costs due to the boom in demand.
Although the government has imposed a ban on foreign buying, yet the demand for the housing continues. Seeing the growing challenge in the housing affordability, Jacinda Arden’s government in August 2018 banned foreigners from buying homes in New Zealand. The country experienced a growth of 5.36% in the fourth quarter of 2019.
S&P/NZX All Real Estate index dwindled by around 4.5% on a YTD basis on 30 March 2020, beating the benchmark index hands down. The real industrial developer, Goodman Property Trust (NZX: GMT) saw a significant rise of 23.70% in its share price in the 1-year period as on 30 March 2020.