This year has surpassed even our wildest imagination with a global pandemic racing the world causing severe restrictions crumbling economic activity on a scale not witnessed since World War II. Despite this horrible backdrop we have witnessed some extraordinary events in global equity markets from large winners and losers across companies, industries, and countries. We look at this year’s trends and whether they will continue next year.
This year’s winners and losers
If we look at the two biggest equity markets in the world, the US and Europe, then there is a clear signal across the winners and losers among single stocks. The 20 best performing stocks across these two markets have had an average return year-to-date of 148% in local currency as of last Friday driven by strong gains across stocks such as Etsy, Sinch, Hellofresh, NEL and Adyen all being part of the digital and green transformation trends this year. The pandemic has lifted companies exposed to the digitalisation and governments have increased their investment commitments on the green transformation with a new “green deal” in the EU lifting companies with exposure to green energy.
One company that is not on the list of winners is Tesla but would have been on the list if the company had been part of the S&P 500 Index. Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically despite the economic fallout fuelling a multiple expansion discounting Tesla dominance in the future car industry and big player in the future of energy markets. Tesla was recently admitted into the S&P 500 index and the inclusion happens today.
The 20 best performing stocks in 2020 among US and European equities
Name | Industry | Return YTD (%) | Total Return 5Y (%) | 12M Fwd P/E |
Etsy Inc | Online Marketplace | 330.6 | 2,113.0 | 78.95 |
Sinch AB | Communications Software | 315.4 | 1,496.0 | 77.70 |
HelloFresh SE | Supermarket - Online | 232.8 | NM | 38.75 |
NEL ASA | Fuel Cells | 191.7 | 572.1 | NM |
Evolution Gaming Group AB | Mobile & Online Gambling | 182.7 | 1,332.0 | 39.30 |
Adyen NV | Financial Transaction Processors | 166.7 | NM | 149.62 |
Zur Rose Group AG | Pharmacies & Drug Stores | 140.7 | 995.7 | NM |
Pandora A/S | Jewelry Stores | 134.9 | -2.5 | 17.99 |
NVIDIA Corp | App Specific Multimedia | 126.0 | 1,588.1 | 46.40 |
PayPal Holdings Inc | Financial Transaction Processors | 118.6 | 576.0 | 52.50 |
L Brands Inc | Women's Clothing Stores | 115.9 | -48.3 | 14.32 |
Advanced Micro Devices Inc | App Specific Multimedia | 109.2 | 3,815.1 | 53.87 |
Ambu A/S | Surgical Appliances & Supplies | 101.4 | 465.2 | 137.59 |
Zalando SE | Apparel & Footwear - Online | 101.3 | 151.9 | 95.16 |
Vestas Wind Systems A/S | Wind Turbines | 100.7 | 202.2 | 36.30 |
ServiceNow Inc | Infrastructure Software | 100.3 | 559.5 | 102.31 |
Sartorius Stedim Biotech | Life Science Equipment | 97.5 | 409.3 | 59.71 |
Dino Polska SA | Supermarkets | 95.8 | NM | 34.93 |
KGHM Polska Miedz SA | Copper Mining | 94.5 | 216.9 | 10.35 |
Albemarle Corp | Specialty Chemicals | 93.6 | 193.7 | 33.98 |
Source: Bloomberg and Saxo Group
The 20 worst performing stocks among US and European equities
Name | Industry | Return YTD (%) | Total Return 5Y (%) | 12M Fwd P/E |
Societe Generale SA | Diversified Banks | -45.1 | -49.2 | 11.6 |
Royal Caribbean Cruises Ltd | Cruise Lines | -45.2 | -16.6 | NM |
HollyFrontier Corp | Petroleum Refining | -47.9 | -27.8 | 135.2 |
Diamondback Energy Inc | Crude Oil & Natural Gas E&P | -48.9 | -27.5 | 11.6 |
United Airlines Holdings Inc | Full Service Airline | -49.2 | -21.4 | NM |
Marathon Oil Corp | Crude Oil & Natural Gas E&P | -49.9 | -42.3 | NM |
ABN AMRO Bank NV | Banks | -50.7 | -49.7 | 17.6 |
Centrica PLC | Elec & Gas Marketing & Trading | -51.4 | -72.1 | 9.6 |
Rolls-Royce Holdings PLC | Aircraft Engines & Eng Parts | -51.4 | -39.0 | NM |
Unibail-Rodamco-Westfield | Shopping Center REIT | -51.6 | -63.7 | 7.4 |
Occidental Petroleum Corp | Crude Oil & Natural Gas E&P | -52.1 | -63.4 | NM |
TechnipFMC PLC | Oilfield Services & Equipment | -54.9 | -64.3 | 14.4 |
Network International Holdings PLC | Consumer Finance | -56.7 | NM | 31.2 |
Norwegian Cruise Line Holdings Ltd | Cruise Lines | -56.9 | -55.7 | NM |
Galapagos NV | Biotech | -57.0 | 53.4 | NM |
Carnival Corp | Cruise Lines | -57.3 | -53.1 | NM |
TechnipFMC PLC | Oilfield Services & Equipment | -57.7 | NM | 14.5 |
Carnival PLC | Cruise Lines | -61.9 | -56.8 | NM |
International Consolidated Airlines Group SA | Mainline Airline - Full Svc | -62.3 | -49.2 | NM |
Banco de Sabadell SA | Banks | -64.1 | -73.9 | 30.6 |
Source: Bloomberg and Saxo Group
Among the 20 worst performing stocks the average total return has been -54% this year in local currency driven by European stocks. On the losing list, we find European banks hit hard by the economic fallout, cruise lines and airliners hit hard by travel restrictions and then of course companies related to the oil and gas industry which have been hit hard by lower demand for energy. The energy sector also delivered a true outlier in financial markets history with the first ever negative futures prices with WTI crude going negative as the market ran out of storage capacity. It was a short anomaly and the market quickly normalised again.
We know from the equity factor literature that performance over the past 12 months has a tendency on average to extend, this is also called the momentum effect, so based on past experience we should expect these trends in single stocks to continue, that is digital and green energy companies to continue higher and everything travel related to continue underperforming. But we would argue that this year has been so special that this relationship has a high likelihood of not extending and thus we could see strong mean reversion effects in these performance lists. A better than expected vaccine roll-out is naturally a key necessity for this pattern.
Emerging markets have shown strength
Based on closing prices on Friday, emerging markets had been the best performing market this year ahead of US equities reflecting the better relative handling of Covid-19 in Asia which has enabled the region to faster resume production capacity and exports goods into the developed worlds, but also seeing a faster rebound in consumer confidence and spending. The positive rebound in Asia causing emerging market equities to hit a new all-time high in USD has also spilled into Japanese equities up 13% year-to-date.