Coronavirus infections have risen steadily across the globe – but not in an evenly distributed manner. Some countries have contained the virus well and stock markets responded positively. Others now face another lockdown and share prices are likely to fall. Knowing which nations are winning the battle against Covid-19 gives investors a steer on where is best to invest.
The management of Covid-19 should help investors know where to put their savings to work. We look at major stock markets around the world and investigate where there is money to be made.
Britain is battling a second wave with regional lockdowns and a tier system, but the virus has spread quickly.
Infection data showed Britain recorded its highest ever rates per day, at more than 20,000 new cases, and daily deaths are back at levels seen in June: more than 200 a day.
There is more economic and stock market pain to come, according to Tom Stevenson, of investment manager Fidelity International. He said the unemployment rate looked likely to rise to levels not seen since the early 1980s and a hard Brexit could also damage the economy and send share prices lower still.
However, he argued that storm clouds ahead for British stocks could be interpreted as a contrarian sign to invest.
“The time to get interested in a market is when everyone is familiar with the bad news. Even if what everyone is worried about has not yet happened," he said.
A plus for British stocks was that the income on offer was relatively cheap, he noted. Even after cuts to payouts this year – the third quarter saw the lowest dividend levels since 2010 – the stock market still yielded close to 4pc.
Investors that are more pessimistic about the outlook for the British economy could still buy a FTSE 100 index, a basket of Britain's largest companies. It is packed with huge firms that make profits abroad, such as oil and mining businesses, consumer goods companies like Unilever and Diageo, and giant pharmaceutical stocks.
FTSE 100 stocks make about two thirds of their profits overseas, so an economic slowdown at home would be less destructive. In contrast, stocks in the the FTSE 250, the next largest 250 businesses, make about half their sales in Britain and another lockdown would be more damaging.
America appears to have stemmed rising cases but the infection level is still extremely high, with around 50,000 new cases and 1,000 deaths a day.
However, it has led the world in terms of Covid cases for some time and its stock market still performed well. The S&P 500, a basket of its largest companies, returned 9pc this year while the FTSE 100 has dropped 20pc.
The American stock market is dominated by technology companies that have thrived as our lives were forced online due to lockdown. Seven of the 10 largest companies are tech firms, while Britain houses no tech giants among is biggest businesses.
Cases will remain stubbornly high but the stock market should continue to be resilient because of the tech component.
Mr Stevenson said: “The American stock market is heavily weighted towards the pandemic’s winners, notably in technology, while the British index is biased towards the areas that investors have little interest in today – out of favour energy stocks and financials.
“Profit growth in the America has been faster than in the rest of the world and will most likely continue that way – America remains dominant in the sectors that should drive the recovery from the pandemic,” he said.
China has contained the virus and its economy is roaring again. In the past month it reported just one death and under 1,000 new cases. When there was a minor outbreak in Quingdao, a city of 9 million people, it shut down it down and reportedly tested everyone.
While draconian, the effect on the economy was clear. It grew 5pc from the start of July to end of September an its stock market followed suit. The CSI 300, a basket of China's largest companies, has risen 25pc this year and the market value surpassed $10trn (£7.7trn).
A healthy economy free from prolonged lockdowns is good for businesses and the country's stock market.
Like China, Japan has been successful in managing the virus. It is averaging around 500 new cases a day but under 10 deaths. There have been just 1,700 deaths and the economy has rebounded strongly.
It closed schools at the height of the virus but avoided a strict national lockdown. The economy contracted 8pc in the second quarter of the year, well below the 20pc drop in Britain. Consequently, its stock market has also had a good year, rising 4pc thus far.
Progress battling the virus is a sign that the stock market will continue to rise, but Mr Stevenson warned there was a chance share prices got ahead of economic reality.
He said: “Asia has started to get back to normal, as Covid fears diminish. Economies are recovering quickly from the first quarter slump. But the business-as-usual philosophy has impacted the stock market too, with shares rising further and faster than seems justified by reality.”
India was hit hard by the virus but cases and deaths have subsided. It had close to 50,000 infections a day but this is half the 100,000 a day peak in September.
Shamik Dhar, of BNY Mellon Investment Management, said the country was moving in the right direction and the bad news had been overdone by investors, with a stock market rebound likely.
“The divide between good Covid management in east and north Asia vs weaker management in India will continue, but stock markets have already reflected this and we could see share price rises if investors decide pessimism has been overdone,” he said.
Nicholas Field, of investment manager Schroders, said lockdown in India was unsuccessful which was a blessing in disguise for the economy.
“India has a big informal economy which was hard to shut down as many people have to work to eat. This has meant that it never really switched off and the economy remained relatively healthy, despite the spread of Covid-19. However, the government has fewer resources than other countries to stimulate the economy," he said.