Investments in stocks over the last three months have yielded even double returns

The coronavirus crisis, which was a shockingly unprecedented experience for the economy, was an opportunity for profit from buying and selling stocks – both in the domestic market and on global capital markets. One small investor told us that at the beginning of the crisis, when stock owners were panicking and mass-selling their ownership stakes, he did the exact opposite: at that moment, he decided to buy. Specifically, one of the stocks he traded was that of the American airline Delta Airlines, which he bought for $24 per share, and which was worth $62 before the major drop. He sold it in April, after about two months, for $37. Since he invested ten thousand US dollars in that transaction, he made a profit of $5,400. Our interlocutor had not invested in stocks before, but he said that he was prompted to do so because he had witnessed two previous stock market crashes and recoveries, the first time on September 11, 2001, and then during the 2009 crisis, so he tried to take advantage of the coronavirus crisis for profit and succeeded in that endeavor.

Vlatko Kesegić, a broker and investment advisor at Fima Securities, emphasizes that anyone who was brave enough in March to engage capital and buy stocks, at a time when a major crash was recorded on all global stock exchanges, could have made a good profit. Younger clients most often bought shares of technology companies. From the period of the lowest prices in March, Zoom Video Communications, Inc. has increased by 200 percent, and since the beginning of the year by as much as 250 percent. The company was listed on the stock exchange in August 2019, when the share price was $36, and today it is around $240, which means that investors could have made an incredible 670 percent profit on Zoom!

Another company that was a big winner of the crisis is Amazon. As more and more commerce was based on online sales, Amazon has increased by 41.5 percent since the beginning of the year. The third winner, according to Kesegić, was Netflix, as most people stayed home in isolation, which drastically increased the number of its subscribers, and thus the share price, which rose by 35 percent.

The low oil price, especially its negative indicators, attracted many clients as everyone expected a price recovery, which did happen.

Investors also focused on companies in the healthcare and pharmaceutical sectors that are working on developing a vaccine against the coronavirus. The one that finds a vaccine first will be the main winner in the capital market. Thus, Regeneron Pharmaceuticals has increased by 58 percent since the beginning of the year, which is not surprising as Germany, France, and Spain have already ordered 500 million doses of the vaccine from whoever invents and produces it.

Despite the crisis, many companies found themselves at historical peaks: Apple reached a value of one and a half trillion dollars, followed by Microsoft and Google, which initially fell but then rapidly rose. Airlines and the automotive industry also began to recover as it was predicted that the decline would not be as drastic as it initially seemed and that they would recover sooner or later. Many also grew, and one of the few in the automotive industry was Tesla. The cryptocurrency market reacted similarly to the stock market: it fell around the same time and recovered around the same time. Although it was speculated that cryptocurrencies would be a refuge for investors during the coronavirus crisis, they instead chose liquidity as a refuge.

When it comes to domestic stocks, Fima Securities analysts point out that after the initial drop, food companies – Podravka and Atlantic Group – quickly stabilized. From the beginning of the year to the peak of the pandemic, Podravka was about 32 percent in the red, which is in line with the market decline. After that, it recovered by 30 percent, but a good indicator is that it was among the first to return to values before the outbreak of the crisis.

In Croatia, HT and Ericsson Nikola Tesla recorded the least declines. AD Plastik recovered by 40 percent, Optima Telekom, Saponia, and Dalekovod by more than 40 percent, better and faster than Crobex, which recovered by 20 percent. Valamar Riviera is also recovering quickly, whose stock has fallen by 54 percent since the beginning of the year, but its value managed to recover by 50 percent, meaning it is now about 75 percent of its value before the crisis began.

– Those investors who entered stock trading when they were at their lowest level could earn thirty, fifty, and more percent. On foreign stocks, much more could be earned. We are recording a drastic increase in the number of retail investors not only in the purchase of domestic stocks but also foreign ones. We have always had the same percentage of realized trading in Croatia and abroad, and for the first time this year, more clients are realizing transactions on foreign exchanges than on domestic ones – emphasizes Kesegić.

And what did the interlocutors of Lider say about trading on domestic and foreign exchanges and when we can expect a new bottom on the exchanges, read in the digital and printed edition of Lider.

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