Coronavirus Stock Market: A Post-pandemic Stock Market Glimpse

This Coronavirus stock market prediction article is written by Hao Liu, Financial Analyst at I Know First.

coronavirus stock market street
(photo: Miguel Medina/Agence France-Presse/Getty Images)


  • The macroeconomy of the post-pandemic world features large deficit and debt, and globalization will be much weaker than nowadays.
  • Tech and healthcare are definitely sectors that investors should include in their post-pandemic portfolios.
  • Two strategies to outperform the post Coronavirus stock market is either to invest in cheaper stocks now and then wait, or to invest in stocks with strong resilience and strong balance sheets (e.g., FB, NFLX).
  • During this complex time, it’s crucial to include logarithmic predictions into investing strategy.

Last week I bought my first cup of coffee for the past couple of months. While the staff smiled at me as she passed on to me the coffee, I felt a long-lost sense of normality after all this time. As we see the local coffee shops reopen and social distancing rules get loosened in some regions, we can’t help but ponder what life will be like after this horrible crisis. As I smiled back at the staff behind the plastic mask, I knew the normality will never be the same ‘normal’ as before. 

Last month we published an article that walked us through the outperforming sectors during the pandemic. Today we’ll look further into the performance of sectors after the pandemic. Of course there will be more uncertainties when we want to predict on a further future, but there are still things we can be sure about. Though fewer definite conclusions will be drawn in this article, I’ll include aspects I reckon investors should consider when making future decisions.

More Debt, Technology, and Less Globalization

So what’s the ‘new normal’? Up till now, no full answer can be given to this question because we don’t have enough past experiences to learn from. Some may argue that we’ve had financial crises, we’ve had oil shocks, some may compare this pandemic to the wars. However, the current situation is nothing like any of these alone, but a combination of massive economic and social crises driven by certain disease that leads to global economy shutdown. Additionally, according to epidemiologists, someday COVID-19 may be the history, but for the few years to come, this virus is likely to become endemic that returns periodically. This crisis is unprecedented in history. Apart from this, how the governments respond, the fiscal policies amid and after the crisis, as well as technology developments altogether will also play a significant role in shaping the post-pandemic world.

Nevertheless, for investors, it’s crucial to think and act ahead. Based on observations over the past few months in the pandemic, despite all the uncertainties, what we can be almost sure about the post-pandemic world is that the new normal features more debt, more technology, and less globalization. 

coronavirus stock market - Bar chart of % of GDP showing Government deficits is set to rise in the post-pandemic world

The global economy will start with a huge fiscal deficit, a lot more debt in both public and private sectors, particularly in private sectors, and particularly in emerging economies. Defaults and bankruptcies will kick in with a lag. As interest rate is likely to remain low, taxes will increase to manage the public debt. The penetration of technology will last into the post-pandemic world, as a result of which the nature of many businesses will shift. Recently the stressful relationship between US and China is getting worse, and the inevitable de-globalization caused by the virus seems persistent.

Two Strategies to Win in the Post Coronavirus Stock Market

To achieve a winning position in the post-pandemic market requires strategies on long-term investments.

coronavirus stock market

One strategy is to invest in currently cheaper sectors and then wait to gain as they gradually recover from the crisis. As shown in the graph above, in the COVID-19 age, most capital has flowed into healthcare, telecoms and tech sector, inflicting heavy losses on energy, industrials and materials sector. However, if we’re looking at a world where the virus is under control and things are steadily functioning in the new environment, it’s safe to say that sector like retail will rebound. This is because this kind of sectors are necessities in people’s life, and demand will gradually climb back to normal level. Especially pay attention to those companies that are positively taking actions to adapt to the new environment during the pandemic, because those are the ones that are more likely to close the gap with current market leaders.

Another strategy is to invest in stocks that are currently not cheap but show a high capacity for disruption. Such stocks are supported by strong balance sheets and have robust cash flows. Especially considering that the interest rate after the crisis is likely to remain low, as I discussed above, looking for companies that have great growth potential is a reliable strategy for long-term holdings. And to look for companies with strong growth potential, it’s best to start with sectors with strong growth potential. In the foreseeable future, tech and healthcare sectors are definitely the big winners from this crisis, the performance of other sectors will depend on multiple influential factors (will be discussed later).

Momentum of Tech Sector Will Retain After Pandemic

We can see from the predictions for tech stocks over the last month have been consistent long recommendations. The shift to digitalization will be permanent, and the impact of technology will linger on. The tech sector consists of a large variety of different companies, ranging from the Fangs to smart ovens producers. E-commerce companies can also be included in this sector since part of their services such as digital payments and virtual shopfronts can never detach from tech platforms. Generally speaking, I believe especially the tech companies that provide cloud or digital services, should play an indispensable part in your stock selection after the crisis subsides. Now let me elaborate on the rationale behind this to you.

coronavirus stock market - Stocks’ performance (rebased to 100) shows indications for the post-pandemic stock market

From the above graph we can see all the indices show a consistent sign that the IT sector is picking up from the crisis. There exists a constant gap (around 20%) between Russell 2000 and both Nasdaq and S&P 500 is because Russell 2000 represents stocks with relatively small capitalization, while Nasdaq is tech-heavy and S&P 500 is more market-weighted, comprising industry leaders such as Apple, Amazon, Alphabet and Facebook. This 20% gap, which also shows a tendency of getting larger, means the small-cap players in the market are more negatively affected by the pandemic. Meanwhile, the fact that these tech companies constitute a large percentage of the capital market despite the economic shutdown further reveals the resilience of this industry under crisis. If we take a closer look at the tech industry and compare the price performances of the leading companies with others over the past five months (see graph down below), we can find that the big tech champions are emerging from the crisis stronger than ever.

coronavirus stock market - Chart shows share price performance since beginning of year (%) showing Faangs bites granola, which is a trend estimated to last into the post-pandemic market

Then the question becomes whether this momentum is likely to retain into the post-pandemic world. Senior Market Columnist John Authers at Bloomberg thinks the Coronavirus stock market is having real momentum that will last as long as nothing interferes with its optimism about the coronavirus. I hold a similar point of view for two major reasons. One is that consumers’ behaviors will have already altered after the crisis. As technology penetrated into many aspects of human life to support us during the pandemic, the impact of it will not diminish along with the virus. We’ve already seen how digitalization changed human life over the past two years. Things like digital payment and digital books has transformed some of our habits, and that is something will last. Likewise, people aren’t going to abandon their digital switches and intelligent workout equipment, or quit using webcams and healthcare apps in their new normal life. Because after such a long time working from home, people’s habits have changed.

Another reason that the tech sector will thrive in the post Coronavirus stock market is that the progress they made during the crisis will further build up their resilience. As I have discussed above, the tech sector has already outperformed the others in this crisis. Last month the leading tech companies altogether have achieved 43% rebound compared to 33% of the broader market. And taking further smart moves to adapt to and take advantage of the current situation will lead them to a higher place. Facebook is a very good example. After the announcement of “Shops” to take advantage of the current online shopping boom, which Kurt Wagner at Bloomberg thinks might actually work, Facebook will directly benefit from the increase of demand as economies recover. There are also other signs indicating strong balance sheets and robust cash flows for Facebook such as its well adaption to remote workforce. Similarly, the collaborations between tech and healthcare sector also looks promising for tech companies as healthcare will definitely play a big part in the post Coronavirus stock market (will be discussed below), it’s smart to seek opportunities that will last into the future. As time goes by, the market may expect more adaptions and innovations within the tech sector, and the winner will be the ones with the highest resilience and strongest balance sheets.

Healthcare Is the Key Investment Theme for Next Decade

Line chart of Indices rebased showing Healthcare leads broader market

As shown in the graph above, we can see that healthcare sector is leading the broader market globally. This is easy to understand as the world is currently in the midst of developing vaccines and governments have been pushing healthcare plans. The question again is whether this momentum will last in the post-pandemic world, maybe after a vaccine is developed. I hold the view that the healthcare sector will stay strong after the crisis subsides. Maybe in the next 2-3 years, sooner or later the vaccine will be developed. But the battle against COVID-19 will last longer than that. There is unlikely to be a global outbreak, but COVID-19 may become a regional problem in some poor areas for lack of access to treatment, and regional healthcare policies also vary. Apart from this, healthcare will also be in great need in order to solve the increasing mental health problems resulted from job loss during the pandemic. Therefore, it will be a long battle against the virus even in the post-pandemic life. Besides, healthcare will also contribute greatly to recover the post-pandemic economy. Vincent Deluard at INTL FCStone pointed out that “Healthcare is the only sector which can replace the jobs lost to automation and to COVID-19 in retail and leisure”, indicating a good prospect for healthcare sector. He also predicted healthcare to be the key investment theme for the next decade, following the dominance of FAANGs in the past decade. Some specific stock options are also given here.

In the post-pandemic decade, healthcare is estimated to be the key investment theme.
(Source: INTL FCStone)

Multiple factors affect future performance of many sectors

In the post-pandemic world, commuting sector and real estate sector will also be massively transformed as a result of the impact of technology. Commercial real estate sector, in particular, may be dealt a near mortal-blow as people rethink how staff work. Hospitality sector is also unlikely to survive in the early stage of the post-pandemic world if people still practice certain social-distancing. Apart from these sectors, now it’s still hard to tell the performance of many other sectors based on early signs. There are so many influential factors that define the performance together. Fiscal policy definitely play a crucial part in this, both regional and nationwide. In addition, there also exist sentimental and social factors. While Paul Donovan at UBS Wealth Management, thinks that fear and confidence will have a great impact on the post-pandemic economy, “You are coming back to a much lower level of activity simply because of,” James Pomeroy at HSBC also pointed out social factors that “people simply do not want or feel they should be going out at the same rate as they used to previously”. Another un-neglectable fact is the change of behaviors will shift the nature of many sectors. The big food brands are a typical example. After making direct sales to customers during the pandemic, may come back without retailers. For another example, future distributions may be transitioned to a more robotic pattern. In general, all these factors point to the fact that the economy will not recover as swift as people wish. China is the first country that steps into the next phase of the crisis. But if we take a look at China’s economic recovery trajectory after COVID-19, we can see real estate, coal and commuting sector still remain below the level before COVID-19.

Covid-19’s impact on the Chinese economy shows the post-pandemic recovery takes time.

AI Helps Predict the Coronavirus Stock Market in Unpredictable Times

We’re now going through a very strange time where the capital market is more difficult to predict than ever. The value investing theory practiced by Keynes and Buffett has performed poorly during the pandemic. As I firmly believe fundamentals are always crucial for investment decisions, I also want to point out that combining traditional value measures with a more intelligent, algorithmic quantitative analysis system is not a bad idea, especially at this unpredictable time. From the past recessions, we have learned that value investing works better over value stocks that are economically-sensitive. Therefore, during the likely recession after the pandemic, it’s important to add something else to the investing strategy. 

I Know First has been using its AI technology to systematically predict market performance dynamics for years, and proves to be right about the post Coronavirus stock market time. I Know First also provides a Coronavirus package, covering a wide range of sectors on both short and long positions, for investors to better adapt and benefit from this special time.


As economies start to reopen, investors also wish to predict the market following the COVID-19. Although the recovery may not be soon as they expect, the thoughts are appreciated. Also, as we may not be certain about many things, there are things we think more likely than others, and things we need to keep an eye on as the situation proceeds.

We are all aware that the world will be quite after the pandemic. There are several certain changes in the post-pandemic life: more debt, more technology, and less globalization. The consequences of these changes include fiscal policy changes such as more tax,  change of business nature, as well as consumer behaviors. Tech and healthcare sectors will thrive through and stay strong after the pandemic, while the prospects of commuting and real estate sectors are quite pessimistic. Many sectors will be greatly transformed by the technology, and may emerge out of the crisis with new business patterns.

For investor, now it’s a good time to include more logarithmic predictions as value investing proves to be less reliable in such a complex time. As we constantly keep on eye on the current market, let’s also hope this crisis subsides smoothly soon.

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