Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
This time next week the first people to be vaccinated with the Oxford AstraZeneca vaccine should have received their initial jab. With just a week to wait and with vaccine approval having taken record time, going from concept to delivery within less than a year, the end looks in sight for the pandemic that has blighted our lives for the past year.
AstraZeneca said on Wednesday the UK Medicines and Healthcare products Regulatory Agency had granted it emergency authorisation, allowing it to be rushed to patients and offering renewed hope of dampening the pandemic, just as numbers infected hit a record high.
Today came news we have all been waiting for, that the UK drugs watchdog has approved the coronavirus vaccine developed by Oxford University and licensed to AstraZeneca, the Anglo-Swedish drug maker. With the new variant now infecting record numbers a day - mainly in London and the South East and East of England - and news of the vaccine approval coming hours before more areas of the country are expected to be plunged into the toughest tier (and even possibly even higher restrictions imposed on the worst-hit areas) the mood of optimism though could be tempered by the current seriousness of the situation.
But, it is more than likely to be hugely welcomed after a year of such unprecedented uncertainty and insecurity. And having seen the FTSE 100 close 1.6% higher yesterday, on the first trading day since the Brexit deal was agreed, it was again, on Wednesday morning, the day the Brexit Bill goes before parliament, up again, with unsurprisingly AstraZeneca among the most-traded shares.
And there is, after all, much to be hopeful about. But there is also no doubt that 2020 has been - and continues to be - a difficult year for so many people. And for so many sectors of the economy.
From shops to pubs, hotels to cinemas, 2020 has been dire in its various ways for restaurants and pubs, hotels and leisure providers - any business, in fact, that relies on customers coming in, spending and enjoying what they have got to offer.
But there is no denying that retail has been one of the hardest hit sectors of the economy. According to the Centre for Retail Research, in 2020 up until 30 November, 52 retailers hit the buffers, including the likes of Jaeger, TM Lewin, Go Outdoors, Monsoon Accessorize, Oasis, Warehouse and Debenhams, the department store which lost its fight to survive.
To cap it all, at the end of November Sir Philip Green’s Arcadia retail empire, which includes Topshop, Burton and Dorothy Perkins, went into administration putting 13,000 jobs at risk. And last ditch efforts to rescue Debenhams failed, when JD Sports, the last remaining bidder withdrew. Some 12,000 jobs are set to be lost there.
It is little surprise that so many of these failed retailers are clothing chains. Forced stores closures after a stop-start year of national and local lockdowns have taken their toll. The British Retail Consortium has said Covid restrictions have cost retailers £2 billion a week in lost sales. And the latest figures from the Office for National Statistics show that sales fell by 3.8% in November month, bringing to an end a six-month run of increasing sales. And clothing stores bore the brunt with a sharp fall from the previous month.
And the current tiered lockdowns will certainly have not helped at all, with vast swathes of the UK’s high streets closed to all but shoppers seeking essential items. As a result, the post-Christmas sales, which are traditionally boom time for shops, are also very different this year.
Boxing Day sales are expected to plummet after Covid-19 restrictions meant shops in many areas were forced to stay closed, and it is anticipated that footfall will be down as much as 60% across the UK ,compared with last year, according to analysts at retail data group Springboard.
Not all is entirely lost though, of course. Supermarkets are expected to have done very well from a mixture of their ability to stay open throughout lockdowns as essential retailers to panic-buying at the start of the pandemic, panic-buying ahead of the announcement of the Brexit deal and, of course, the annual festive spend.
An estimated £2.7 billion will have been spent by UK shoppers by the close of Boxing Day, according to research from Barclaycard, with each consumer spending an average of £162 online, although that’s down from last year's projection of £186 each and a total of £3.7 billion.
And that does of course include sales at the online retailers, who have also seen their revenue boosted by the shifts forced by the pandemic. The ONS data shows that online retailing accounted for 31.4% of the total spend in November, compared with 28.6% a year earlier.
That change in consumer trends is likely to increase and is also very likely to stay. As a result, the likes of ASOS and Boohoo, which have already persuaded a whole generation of young shoppers to switch from Saturday mall and high street shopping sprees to any time shops online, have found the retailers they once threatened joining them online.
Only Primark has managed to completely swerve the assumption that every retailer needs to have an online presence if it is to survive. The queues stretching around the block outside Primark stores up and down the country on lockdown lifting days suggest that loyal Primark shoppers haven’t been going elsewhere; although parent company Associated British Foods admits the forced store closures have still cost it dearly - an estimated £2 billion in lost sales and some £650 million in profits.
Has it made the right decision? Has the retail sector got a chance once the pandemic is controlled? How long will that take and how long before everything is ‘back to normal’? There are still more questions than answers and that is likely to be the case for some time yet.
In the meantime, answering the questions he can, from a global perspective, Fidelity Investment Director Tom Stevenson, is back with his first Outlook for 2021 at the start of the new year. As well as giving us an overview of the sectors, asset classes and economies to watch in 2021, Tom will take questions from you. So whatever you want to ask, pop your questions into the box here and we will put them to Tom in a webcast that will be ready to watch online from 7 January.
Important information: Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.
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