- UK premier Boris Johnson unveiled his plan to reopen the economy, and other leaders will follow.
- Shares in European airlines have soared on the news this week.
- These are the top 38 stocks that will benefit from the reopening trade, Goldman Sachs said.
- Visit the Business section of Insider for more stories.
On Monday, UK Prime Minister Boris Johnson announced a new roadmap to take Britain out of lockdown, looking to follow Israel into a new, post-vaccine resumption of economic activity.
Britain has one of the most rapid COVID-19 vaccination programs in the world, after Israel and the United Arab Emirates, who are vying for poll position. Strict lockdown measures are still in force in the country, which has one of the highest death rates from the virus globally, but these restrictions will lift in the coming weeks, as greater numbers of the population are innoculated.
UK-listed airlines like budget carrier easyJet are already staging a comeback, gaining 171% in the last three trading days alone, as investors grow optimistic about the prospects for more normal consumption patterns, especially travel.
With mass-vaccination underway in Europe, the United States and elsewhere, investors are starting to turn towards some of those stocks that were worse-hit by the pandemic to capitalize on that economic recovery, Goldman Sachs said.
Sectors like retail, leisure and travel saw demand crippled, as coronavirus spread throughout the Western world, but Goldman said in a note on Monday it expects these stocks to “outperform on the back of a sustained broader macro recovery.”
However, reopening is not as easy as turning on a switch, and economic activity is still 65% lower than pre-covid levels, the note said, lower than the roughly 50% in mid-December. A number of major economies, including Britain, Germany, France and Spain, imposed new lockdowns and restrictions in early January.
The difference between domestic travel, such as restaurant visits, and road traffic, for example and international travel is currently relatively small, with activity levels in both bands taking big hits, to run at around 80% and 58% below normla levels, respectively.
This divergence was much larger in last summer’s shorter reopening phase, when domestic categories staged a stronger recovery to hold just 10% below pre-covid levels, while international travel remained around 60% lower.
“We expect to see a similar pattern as economies reopen during 2021,” the note added.
Now, with vaccination rolling out and as some of the world’s largest economies reopen, a lot of these market laggards have the opportunity to catch-up with some of the market-leading pandemic beneficiaries.
These are the 38 companies that Goldman Sachs lists as a “buy”, based on their potential in the post-lockdown economic recovery.