We are near to the halfway mark of year 2021. The global vaccination campaign is gaining traction. As of writing, 20.8% of the world population has received at least one dose of a COVID-19 vaccine. 2.4 billions doses have been administered globally and 32.6 million are now administered each day. Only 0.8% of people in low-income countries have received at least one dose. (Source: ourworldindata.com)

Share of people vaccinated against COVID-19, Jun 15, 2021

A tale of two cities

Global vaccination campaign is obviously a tale of 2 cities, with the low-income countries receiving less than 1% of vaccinations. The time for global leadership and decisive action is therefore now. An immediate rise in the number of vaccine donations to developing countries is required, as is investment in production capacity. A more ambitious global vaccination target – currently set at 30% by the end of the year – should be put in place. The IMF estimates that $50bn worth of new spending could significantly accelerate the end of the pandemic in the developing world. 

Vietnam has started to ask for public donations to buy vaccines recently. Currently, the country has only vaccinated about one percent of its 100m population. Japan has stepped forward and pledged a donation of 1 million covid vaccine doses to Vietnam today.

One good news for the world is that at the recent G7 meeting, they have agreed to donate 1 billion Covid-19 vaccines doses over the next year and work with the private sector, the G20 and other countries to increase the contribution over months to come, according to an almost finalised draft of the communique.

The world as one

I believed no one country or even region can emerged from this crisis alone. The more infections there are, the higher the probability that the virus will undergo mutations which in turn will affect those nations who have gotten a majority of their population vaccinated.

The recovery, though bumpy is definitely underway. We have most probably past the peak of this pandemic with more vaccines getting into the market. From the chart above, we can see that there is a steep decline in the number of global cases since the beginning of May 2021. Hopefully with the global vaccination in progress, this number will continue to fall further and we could see the end of this pandemic. One positive note that i can see out of this global crisis is the fact that many countries have stepped forward to help other lower-income countries in getting vaccination.

Light at the end of the tunnel

Though the route to recovery is going to be bumpy, it has been well supported by global central banks’ accommodative fiscal and monetary policies. In fact, the speed of recovery in some economies came in stronger than earlier expectations. These policies have driven the global stock markets to new heights, especially those sectors that benefit from the global movement control since last year. One of the beneficiary is the technology sector that had continued to scale new heights in the midst of the pandemic.

The hospitality and travel sector will most probably be the last sector to recover from this pandemic. There are a number of tailwinds for this particular sector as well like the pent-up demand for global travel, increased global savings rates, etc. This has actually come with a cost in which we see most national debts have increased during this period of time.

I think the route to a full recovery in global travel is going to be a long and tedious one. With new waves of infection emerging from new variants, it will only make this recovery more bumpy and unpredictable. But there are still good opportunities available in this segment without a doubt. I think with a time frame of 2-3 years, we can see some good investing potential in some of these companies.

I feel that the market may face some form of a correction in the coming months, through September this year. These bull market corrections present investors with opportunities to gain exposure in the travel and hospitality sector at a lower valuation.

Locally, my personal picks for this sector will be Ascott Residence Trust, Genting Singapore, Kimly, SATS, SIA Engineering, Thai Beverage and The HourGlass.

For US, I am picking Delta Airlines, Royal Caribbean Cruises, Host Hotels & resorts, Park Hotels & Resorts and MGM Resorts International.

I would like to position into the banking and finance sector with possible rate hike in 2022. With the rate hike, margins of banks and financial institutions will improve with expanding NIM (Net Interest Margin).

For the Singapore market, i would prefer DBS and Ifast.

For the US Market, I would pick JPM, BAC, BK, and SYF.

Disclaimer:

As of writings, i hold positions in the companies mentioned above. This article is for informational purposes ONLY. It should not be interpreted as a solicitation to purchase securities. Investment comes with risks and there is a possibility of a 100% loss in your capital. More…