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YTD 2022 saw dramatic slowdown in global IPO activity from a record year in 2021

YTD 2022 saw dramatic slowdown in global IPO activity from a record year in 2021
PR Newswire
LONDON, June 29, 2022

Global IPO volumes fell 46%, with proceeds down by 58% 1H year-over-year With global activity almost halved in YTD 2022, the Americas…

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YTD 2022 saw dramatic slowdown in global IPO activity from a record year in 2021

PR Newswire

  • Global IPO volumes fell 46%, with proceeds down by 58% 1H year-over-year
  • With global activity almost halved in YTD 2022, the Americas market recorded the biggest decline
  • Middle East and India were some of the rare bright spots amidst a bearish market

LONDON, June 29, 2022 /PRNewswire/ -- IPO momentum continued to slow from Q1 into Q2, resulting in a considerable decline in both deal numbers and proceeds. Heightened volatility caused by geopolitical tensions and macroeconomic factors, declining valuation and poor post-IPO share price performance led to the postponement of many IPOs during the quarter. The dramatic slowdown in IPO activity in YTD 2022 after a record year in 2021 was experienced across most major markets.

For Q2 2022, the global IPO market saw 305 deals raising US$40.6b in proceeds, a decrease of 54% and 65%, respectively, year-over-year (YOY). YTD 2022, there were a total of 630 IPOs raising US$95.4b in proceeds, reflecting decreases of 46% and 58%, respectively, YOY.

The 10 largest IPOs by proceeds raised US$40b, with energy dominating three of the top four deals, replacing the technology sector as the top IPO fund raiser. The technology sector continued to lead by number, but the average IPO deal size came down from US$293m to US$137m, whereas energy has overtaken to lead by proceeds with average deal size increasing from US$191m to US$680m YOY.

Special purpose acquisition company (SPAC) IPOs are significantly down in line with traditional IPO activity despite new markets joining. The SPAC market has been challenged this year as a result of broader market conditions, regulatory uncertainty and increased redemptions. A record number of existing SPACs are actively seeking targets with the majority of them facing potential expiration in the next year. However, market performance and regulatory clarity will likely drive future deal flow.

In line with the sharp decline in global IPO activity, there was a sizable fall in cross-border activity affected by geopolitical pressures and government policies on overseas listings. These and other findings were published in the EY Global IPO Trends Q2 2022.

Overall regional performance: investors are refocusing on fundamentals

The Americas region completed 41 deals in Q2 2022, raising US$2.5b in proceeds, a decline of 73% in the number of deals and a 95% fall in proceeds YOY. The Asia-Pacific region recorded 181 IPOs, raising US$23.3b in proceeds in Q2, a decline YOY of 37% for volume and 42% in proceeds. EMEIA market IPO activity in Q2 2022 reported 83 deals and raised US$14.8b in proceeds, a YOY decline of 62% and 44%, respectively.

Given the tightened market liquidity and significant decline in stock prices of many new economy companies that went public during the last two years, investors are becoming more selective and are refocusing on the companies' fundamentals instead of just "growth" stories and projections, e.g., sustainable profits and free cash flows.

Paul Go, EY Global IPO Leader, says:

"Any initial momentum carried from a record IPO year of 2021 was quickly lost in the face of increasing market volatility from rising geopolitical tensions, unfavorable macroeconomic factors, weakening stock market/valuation and disappointing post-IPO performance, which further deterred IPO investor sentiment. With tightening market liquidity, investors have become more selective and are refocusing on companies that demonstrate resilient business models and profitable growth, while embedding ESG [environmental, social and governance] as part of their core business values."

Americas saw notable slowdown in IPO activity

Overall, IPO activity in the Americas region saw the sharpest decline (among all regions) in Q2 2022 compared with Q2 2021, with deals down 73% (41 IPOs) and proceeds falling by 95% (US$2.5b). However, compared with Q1 2022, both number of deals and proceeds are up (14% and 6%, respectively).

In the US, an overwhelming majority of 2021 IPOs are trading below offer price, and average performance is trailing broader market declines, influencing investor appetite to participate in new transactions. Despite the much-reduced level of global cross-border IPO activity YTD 2022, the US remains the top cross-border destination.

In Canada, following a record-breaking 2021, one listing on the Toronto Stock Exchange in May 2022 broke the drought in IPO activity. Market turmoil and uncertainties had shut down the TSX's main market listings in 2022, but there are companies in the pipeline that will be able to take advantage of the opportunity once the markets reopen.

Brazil's IPO market slowed to a crawl at the start of 2022 as dozens of companies scrapped or postponed deals. This is the first time that Brazil experienced a dearth of IPOs in the first half of the year since 2016. Market volatility is expected to continue as high inflation persists and interest rates climb to double digits.

Rachel Gerring, EY Americas IPO Leader, says:

"IPO activity across the Americas remains muted amid macroeconomic headwinds that continue to impact performance and valuation. These headwinds have led to a 'wait-and-see' approach. When markets begin to recover and confidence steadies, the types of companies that will kickstart the IPO market will likely be profitable, cash flow-oriented and with meaningful scale. Once the IPO market reopens, companies that move quickly will be able to take advantage of the most opportune moment."

Asia-Pacific IPO market was weakened in 2022

The Asia-Pacific area finished the quarter with a 42% decline in proceeds and 37% decline in deals YOY. However, Asia-Pacific markets performed relatively better benefiting from the two largest global IPOs YTD. The region saw 181 IPOs raising US$23.3b in proceeds during Q2, and 367 IPOs raising US$66.0b in proceeds YTD 2022. In terms of sector activity YTD, materials led the way with 78 IPOs, closely followed by industrials with 77 IPOs. YTD, the Shenzhen Stock Exchange had the highest number of deals with 82, constituting 13% of global IPOs. Meanwhile, the Shanghai Stock Exchange had the highest proceeds with US$32.8b, making up 34% of global IPOs YTD.

YTD 2022, Greater China saw a YOY decline of 36% in deals (191) and a 16% fall in proceeds (US$51.2b). A convergence of factors (COVID-19 restrictions, geopolitical unrest, weakened stock market, economic uncertainty and rising interest rates) had a negative impact on IPO activity in Hong Kong. With COVID-19 restrictions in Shanghai and Beijing lifting, along with the State Council's 33 stabilization policies and measures, China's economy is expected to rebound significantly in Q3 2022 and boost investor sentiment.

Japan saw 37 IPOs raise US$0.5b in total proceeds YTD, down 84% in proceeds and 31% in deals, YOY. Deteriorating investor sentiment is primarily driven by geopolitical conflicts, rising energy prices and depreciation of the Japanese yen. Tokyo Stock Exchange has been restructured into three new market segments – Prime, Standard, and Growth – to boost investor sentiment and gain global market share.

YOY, Australia and New Zealand IPO activity witnessed a modest YTD decline in number of IPOs (3%). However, the decline in proceeds was substantial (76%). It can be attributed to several big IPOs being deferred to 2022 Q3/Q4. While fundraising activities have slowed down mostly due to poor investor sentiment, there have been some M&A activities, including demerger and IPO transactions for carved-out businesses.

Ringo Choi, EY Asia-Pacific IPO Leader, says:

"A multitude of factors, from COVID-19 restrictions and war in Europe to rising inflation rates and US/China tensions, have weakened Asia-Pacific's IPO market in the first half of 2022. But a series of positive economic developments and new government policies in China should result in renewed optimism and a revival in IPO activity across the Asia-Pacific region for the remainder of the year."

EMEIA's IPO market continues to be affected by market volatility

In Q2, EMEIA remains the second largest IPO market after Asia-Pacific and saw 83 IPOs (a decline of 62% YOY) and proceeds raised were US$14.8b (a 44% decline YOY). YTD, there were 186 IPOs with US$24.4b in proceeds.

In the second quarter of 2022, deal numbers in Europe were 43 with proceeds of US$1.5b raised. Europe accounted for 15% of global IPO deals and 4% of proceeds in YTD 2022. Two European exchanges were among the top 12 exchanges by proceeds and one of them by number of deals.

During YTD 2022, India was the only region to witness a YOY rise in IPO activity, both by number of deals (18%) and proceeds (19%), with 32 IPOs in Q2 2022 comprising one of the largest ever IPOs in India that raised US$2.7b.

MENA IPO activity continues to look promising after a strong start to the year, despite uncertainties that are affecting the global IPO outlook. While there was a decline in terms of number of deals (54%), and with seven IPOs in Q2, several mega IPOs (IPOs with proceeds equal to or greater than US$1b) in the region led to a YOY increase of 382% in proceeds during YTD 2022, with 31 IPOs raising US$14.5b in proceeds. The region witnessed four of the top 10 global IPOs YTD.

In the UK, the slower pace of IPO activity was due to a dip in investor confidence from Q4 2021 that carried into 2022. YTD 2022 saw 13 IPOs (with 4 IPOs in Q2) with total proceeds of US$149m, a YOY decline of 71% by volume and 99% fall by proceeds. However, the UK markets regulator has set out plans to simplify listing on the London Stock Exchange to attract more fast-growing tech groups and start-ups in the face of increased competition from the US and the EU.

Dr. Martin Steinbach, EY EMEIA IPO Leader, says:

"Tough times and unusual uncertainties kept market volatility at elevated levels and led to subdued IPO activity. We are seeing investors being more selective and a shift to IPO stories related to energy transition and ESG."

Q3 2022 outlook: uncertainties and volatility are likely to remain

There were many mega IPOs postponed in the first half of 2022, which represent a healthy pipeline of deals that are likely to come to the market when the current uncertainties and volatility subside. However, strong headwinds from the current uncertainties and market volatility are likely to remain. These include geopolitical strains, macroeconomic factors, weak capital market performance and the impact from the lingering pandemic on global travel and related sectors.

The technology sector is likely to continue as the leading sector in terms of the number of deals coming to the market. However, with greater focus on renewable sources of energy in the face of increasing oil prices, the energy sector is expected to continue to lead by proceeds from bigger deals.

ESG will continue to be a sector-agnostic key theme for investors and IPO candidates. As global climate change and energy supply constraints intensify, companies that have embedded ESG into their core business values and operations should attract more investors and higher valuation.

Notes to editors

About EY

EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets.

Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.

Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today. 

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com. 

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients. 

About EY Private

As Advisors to the ambitious™, EY Private professionals possess the experience and passion to support private businesses and their owners in unlocking the full potential of their ambitions. EY Private teams offer distinct insights born from the long EY history of working with business owners and entrepreneurs. These teams support the full spectrum of private enterprises including private capital managers and investors and the portfolio businesses they fund, business owners, family businesses, family offices and entrepreneurs. Visit ey.com/private

About EY Initial Public Offering Services

Going public is a transformative milestone in an organization's journey. As the industry-leading advisor in initial public offering (IPO) services, EY teams advise ambitious organizations around the world and helps equip them for IPO success. EY teams serve as trusted business advisors guiding companies from start to completion, strategically positioning businesses to achieve their goals over short windows of opportunity and preparing companies for their next chapter in the public eye. ey.com/ipo

About the data

The data presented here is available on ey.com/ipo/trends. Q2 2022 (i.e., January-June) is based on completed IPOs from 1 January 2022 to 21 June and expected IPOs by the end of June 2022. Data as of close of business 21 June UK time. All data contained in this document is sourced from Dealogic, CB Insights, Crunchbase, SPAC Insider and EY analysis unless otherwise noted. SPAC IPOs are excluded in all data included in this report, except where indicated. 

Second quarter IPO activity

Month/Quarter

Number of IPOs

Proceeds (US$b)

April 2020

54

$4.8

May 2020

44

$8.5

June 2020

101

$28.7

Q2 2020

199

$42.0

April 2021

204

$34.1

May 2021

175

$31.2

June 2021

280

$50.4

Q2 2021

659

$115.7

April 2022

109

$21.6

May 2022

83

$8.1

June 2022

113

$10.9

Q2 2022

305

$40.6

Source: EY, Dealogic

Appendix: Global IPOs by sector – 2022 YTD refers to priced IPOs from 1 January to 21 June 2022 and expected IPOs by the end of June.

Sectors - YTD

Number of
IPOs

Percentage of
global IPOs

Proceeds
(US$b)

Percentage of global
capital raised

Consumer products

37

5.9 %

$         1,221

1.3 %

Consumer staples

36

5.7 %

$         2,925

3.1 %

Energy

41

6.5 %

$       27,876

29.2 %

Financials

20

3.2 %

$         4,766

5.0 %

Health and life sciences

80

12.7 %

$         7,949

8.3 %

Industrials

109

17.3 %

$       12,051

12.6 %

Materials

116

18.4 %

$         8,487

8.9 %

Media and entertainment

12

1.9 %

$            444

0.5 %

Real estate

29

4.6 %

$         1,649

1.7 %

Retail

19

3.0 %

$         2,670

2.8 %

Technology

120

19.0 %

$       16,387

17.2 %

Telecommunications

11

1.8 %

$         8,975

9.4 %

Global total

630

100 %

$       95,400

100 %

Source: EY, Dealogic 

Figures may not total 100% due to rounding.

Lauren Mosery
EY Global Media Relations
+1 732 977 2063
lauren.mosery@ey.com

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Economics

Catalytic Investment to Improve Community Health Care for Millions Across Africa

Catalytic Investment to Improve Community Health Care for Millions Across Africa
PR Newswire
GENEVA, Aug. 8, 2022

The Global Fund collaborates with the Johnson & Johnson Foundation and the Skoll Foundation to Launch the Africa Frontline First C…

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Catalytic Investment to Improve Community Health Care for Millions Across Africa

PR Newswire

The Global Fund collaborates with the Johnson & Johnson Foundation and the Skoll Foundation to Launch the Africa Frontline First Catalytic Fund

  • Private sector investments to the Global Fund's Africa Frontline First Catalytic Fund from the Johnson & Johnson Foundation and the Skoll Foundation totaling US$ 25 million.
  • The Global Fund to Fight AIDS, TB and Malaria intends to further match this commitment by at least with 1:1.
  • Designed in partnership with the Africa Frontline First Initiative, the Africa Frontline First Catalytic Fund (AFF-CF) will accelerate scale up of community health services in up to 10 African countries.
  • The Catalytic Fund seeks to mobilize at least $100 million to improve community health systems that are providing essential medical care for up to 130 million people.
  • Investing in frontline community health workers can generate a return of up to 10:1 when considering the improved economic, health, and social outcomes of community health workers.

GENEVA, Aug. 8, 2022 /PRNewswire/ -- Today the Global Fund to Fight AIDS, TB and Malaria is announcing a crucial new catalytic fund to support community health workers across up to 10 African countries. The Africa Frontline First Catalytic Fund (AFF-CF) will provide financing to accelerate and sustain the scale up of frontline community health workers, the backbone of community health services.

The Global Fund warmly welcomes the first investments to the Africa Frontline First Catalytic Fund from the Johnson & Johnson Foundation and the Skoll Foundation totaling US $25 million. The Global Fund intends to match these and other investments to bolster support to and domestic financing for community health workers.

These pledges come ahead of the Global Fund's Seventh Replenishment, which aims to raise US $18 billion to fund its next three-year cycle of grants. The Global Fund estimates that the funding of US $18 billion would save 20 million lives, while strengthening health and community systems to reinforce pandemic preparedness.

"For the first time in 20 years, many countries have seen HIV, TB and malaria cases worsen and community health workers are at the forefront of fighting these diseases. This is a unique moment for leaders to join forces and invest in the people and structures that will fight pandemics, infectious diseases, and other health threats, now and in the future" said Peter Sands, Executive Director of The Global Fund.

A professionalized workforce of community health workers, who work hand in hand with communities, is key to responding to future outbreaks and making gains on longstanding priorities. The Global Fund applauds these initial pledges from the Johnson & Johnson Foundation and the Skoll Foundation, but much more financial investment is needed to unlock the full potential and to ensure people access to professionalized, trained, compensated, and integrated community health workers.

The Africa Frontline First Catalytic Fund will help ensure that up to 10 African countries accelerate progress and improve health care delivered at the community level, as well as crucially ensure the women, who make up the large proportion of community health workers, are properly paid for their work. The Catalytic Fund will combine coordinated technical assistance and implementation funding, as well as investments to scale financing, employ digital tools, increase the availability of essential life-saving commodities, and better integrate community health workers within the overall health system.

"Health workers are the cornerstone of care. By training, empowering, and integrating community health workers into existing health systems it's possible to extend care and reduce the burden of disease for millions of people." said Joaquin Duato, CEO of Johnson & Johnson. "The Johnson & Johnson Foundation committed $15 million to the Africa Frontline First Catalytic Fund to ensure delivery of effective, efficient, and equitable care at the frontlines."

The Global Fund Catalytic Fund approach has already shown the power of leveraging philanthropic funding. For example, support from the Children's Investment Fund Foundation for HIV self-testing has increased funding fivefold in two years and increased HIV self-test procurement from thousands to millions in the five countries where it works.

"On the frontlines of pandemic response and prevention, community health workers are critical to bringing essential healthcare to the last mile," said Don Gips, CEO of the Skoll Foundation. "The Africa Frontline First Catalytic Fund brings the power of social innovators like the Financing Alliance for Health and Last Mile Health together with the strength of the Global Fund to ensure that community health workers are paid, trained, and equipped to maintain essential services and lead responses to COVID-19, Ebola, and other outbreaks."

This catalytic investment is a first step towards a broader shared ambition to scale community health, contributing to expanding universal health coverage. As part of this effort,

Africa Frontline First is collaborating with the COVID-19 Commission, which supports H.E. President Ramaphosa in his role as the African Union Champion on COVID-19. In line with the African Union's New Public Health Order, this collaboration pursues the AU's broader target of deploying 2 million community health workers by 2030.

More than 85% of community health workers in Africa, the majority of whom are women, are not paid for their work.  Experience shows that professional community health workers - who are paid, trained, and supervised - are best equipped to provide essential health services in their communities, even amid great challenges.

"In Liberia and around the world, we have seen the power of community health workers to deliver essential care in rural and remote communities - and to maintain that care during crises like the Ebola epidemic and the COVID-19 pandemic," said Her Excellency Ellen Johnson Sirleaf, Nobel Peace Prize recipient and former President of Liberia. "The Africa Frontline First Catalytic Fund is a unique opportunity to invest in those health workers and catalyze real change, creating a healthier and safer world for all."

The Global Fund is a worldwide movement to defeat HIV, TB and malaria and ensure a healthier, safer, more equitable future for all. We raise and invest more than US$4 billion a year to fight the deadliest infectious diseases, challenge the injustice which fuels them and strengthen health systems in more than 100 of the hardest hit countries. Since the beginning of the COVID-19 pandemic, we have invested an additional US$4.3 billion to fight the new pandemic and reinforce systems for health. We unite world leaders, communities, civil society, health workers and the private sector to find solutions that have the most impact, and we take them to scale worldwide. Since 2002, the Global Fund has saved 44 million lives.

Africa Frontline First is a collaborative effort by the Financing Alliance for Health, Last Mile Health, the Community Health Acceleration Partnership, and Community Health Impact Coalition under the championship of President Ellen Johnson Sirleaf.

Information on the work of the Global Fund is available at www.theglobalfund.org
Information on Africa Frontline First is available at  www.africafrontlinefirst.org

Follow the Global Fund on Twitter: http://twitter.com/globalfund
Follow Africa Frontline First on Twitter: https://twitter.com/frontline1st

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Spread & Containment

Stocks for a recession: which companies have historically done well during recessions or are likely to this time?

Last week the Bank of England forecast a recession starting this autumn that it now expects to be deeper and longer than previously assumed. It also expects…

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Last week the Bank of England forecast a recession starting this autumn that it now expects to be deeper and longer than previously assumed. It also expects inflation to hit 13% by the end of the year just months after reassuring that it didn’t expect more than modestly high figures.

Having belatedly acknowledged the extent of the inflation problem, admittedly exacerbated by the impact on energy and food prices the war in Ukraine has had, the UK’s central bank’s nine-member Monetary Policy Committee voted to raise interest rates. Thursday’s 0.5 percentage points rise, which took the BoE’s base rate to 1.75%, was the biggest single increase in 27 years.

The European Central Bank and USA’s Federal Reserve have also taken aggressive measures on rates, with the former also raising rates by 0.5% to 0%. It was the ECB’s first rates rise in 11 years. The Fed went even further, raising rates for the fourth and largest time this year with a 0.75 percentage points hike to between 2.25% and 2.5%.

Aggressive interest rate hikes alongside high levels of inflation tend to result in recession with the combination referred to as stagflation. With inflation expected to remain high next year and not dropping back towards the target 2% before 2023, we could be in for an extended period of recession.

Why stock markets fall during a recession but not all stocks do

Stock markets historically do badly during recessions for the simple reason they are a proxy for the economy and economic activity. When economic activity drops, people and companies have less money or are worried about having less money, so they spend less and companies earn less. Investors also become less optimistic about their prospects and valuations drop.

But the kind of drop in economic activity that leads to recessions is not evenly distributed across all areas of an economy. When consumers cut back on spending, they typically choose to sacrifice some things and not others, rather than applying an even haircut across all costs. And there are goods and services that people spend more on rather than less when tightening their belts.

So while the net impact of a recession has always historically been the London Stock Exchange and other major international stock markets losing market capitalisation, or value, that doesn’t mean all the stocks that constitute them go down. Some go down by more than others. And some stocks grow in value because the companies sell the categories of goods and services people spend more on when they are either poorer or worried about becoming poorer.

Should we be investing “for” a recession?

This surely means all investors need to do to mitigate against a recession is to sell out of the stocks that do badly during an economic slump and buy into those that do well? In theory, yes. In practice, doing that successfully would mean being sure a recession will take place some time before it becomes a reality and timing its onset, then the subsequent recovery, well.

That is of course far easier said than done which is why even professional fund managers don’t attempt the kind of comprehensive portfolio flip that would involve. Some investors will make big bets on events like the onset of a recession or inflation spiralling out of control.

They are the kind of bets that make for dramatic wins like those portrayed in the Hollywood film The Big Crash, which tells the story of a group of traders who predicted and bet big on the 2007 subprime mortgage implosion that triggered the international financial crisis. But as the film relies on for its dramatic tension, the big winners of The Big Crash very nearly got their timing wrong. Another few days and they would have been forced to close their positions just before market conditions turned in their favour and lost everything.

The reality is the big, risky bets that result in spectacular investment wins when they come off are usually far more likely to go wrong than right. Which is why regular investors, rather than high risk traders using leverage, shouldn’t take them. At least not with their main investment portfolio if they don’t have the luxury of being able to justify setting aside 10% to 20% of capital for highr isk-high reward bets.

If you have a well-balanced investment portfolio with a long term horizon and you are happy with the overall quality of your investments, you may choose to do nothing at all to mitigate against the recession that is almost certainly coming. If you have ten years or more until you expect to start drawing down an income from your portfolio, your investments should have plenty of time to recover from this period.

But if you do want to rebalance because you feel your portfolio is generally too heavily weighted towards the kind of growth stocks particularly vulnerable to inflation, higher interest rates and recession, you might want to consider rotating some of your capital into the kind of stocks that might do well in a recession.

How to pick stocks that will do well in a recession?

There are two ways to highlight stocks that might do well in a recession. The first is the most obvious and simplest approach – look at which did well in previous recessions. We had a very brief recession at the start of the Covid-19 pandemic and a much more significant one in 2008/09 in the wake of the international financial crisis. Which companies did well over those periods?

The second approach is to add a layer of complexity into the equation and consider how and why the coming recession might differ from the two most recent historical examples. The 2020 recession was extremely unusual in its brevity. Within a couple of months, stock markets were soaring again as people under quarantine and social distancing restrictions spent more in the digital economy and generally on services and products to enhance their experience being couped up at home.

The 2008/09 recession was also different because it was caused by a systemic failure in the financial sector. Unemployment leapt which is not expected to happen this time around with an especially tight labour market one result of the combination of the pandemic and Brexit. Many households also have higher levels of savings built up during the pandemic which a significant number of analysts believe is softening the impact of inflation.

While there are likely to be constants throughout recessions, there are also differences that should be taken into account. Normally energy companies do badly during a recession as lower economic activity means less energy being used. But energy companies are currently posting record profits because of sky-high energy prices which are one of the major factors behind the expected recession. They should continue to do well while the recession lasts as energy prices dropping again is likely to be one of the catalysts behind the recovery.

The online trading company eToro recently published two baskets of “recession winning stocks” – one made up of Wall Street-listed companies and the other companies listed in the UK. The stocks in each basket were selected because they were the biggest gainers during the last two recessions. Interestingly, they also did well during the intervening period between 2009 and 2020, as well as in the aftermath of the coronavirus crash.

The portfolio of US stocks beat the S&P 500 index of large American businesses by 60 percentage points through the financial crisis between 2007 and 2009 and by 9 percentage points during the Covid crisis in 2020.

The portfolio of UK stocks beat FTSE-100 by 35 percentage points during the financial crisis and by 17 percentage points in the Covid crash. Since 2007, the US portfolio has gained 834%, more than twice the return of the Nasdaq and about five times that of the S&P 500. The UK portfolio’s 129% return is eight times more than the FTSE 100’s, excluding dividends.

eToro says:

“Well represented segments included discount and everyday-low-price retailers as consumers trade down, like Walmart (WMT), Ross Stores (ROST) and Dollar Tree (DLTR).”

“Fast food McDonalds (MCD) is related. Similarly, home DIY, like Home Depot (HD) Lowe’s (LOWE), and auto repair parts stocks Autozone (AZO) and O’Reilly (ORLY). Health care and big biotech is well-represented as inelastic non-discretionary purchases, like Abbott (ABT), Amgen (AMGN), Vertex (VRTX).”

“Also, domestic comforts from toys (Hasbro, HAS) to candy (Hershey, HSY), and getting more from your money and tax (H&R Block, HRB), and educating yourself (2U, TWOU).”

The UK portfolio included the drug makers AstraZeneca and GlaxoSmithKline, which did well because spending money on healthcare and medicines is essential and families don’t tend to cut back even when struggling financially.

The cigarette makers British American Tobacco and Imperial Brands also don’t usually see any downturn in demand because they benefit from a customer base addicted to their products. Both companies pay high and rising dividends. Consumer goods firms such as Unilever and Premier Foods also typically do well because they own strong brands that people bought even after price rises have been passed on.

Proactive Investor also picks out a range of London-listed stocks it expects to do well over the next year or so. In the energy sector that is doing so well at the moment it highlights Harbour Energy as a “core sector stock” and Diversified Energy Company as having “one of the lowest-risk free cash flow profiles in the sector”, while Energean (a client) provides “excellent visibility on multi-decade cash flows”.

Another difference to recent recessions could be how miners do during the one expected from autumn. Normally lower economic activity reduces for demand for commodities but the sector is also facing supply constraints that should see prices supported or rebound quickly.

Copper, mineral sands and diamonds look among the commodities most constrained in terms of supply, with limited supply growth under development. Mining and commodity stocks to look at are suggested as:

“Atalaya Mining (AIM:ATYM, TSX:AYM), Central Asia Metals, Kenmare Resources, Petra Diamonds and Antofagasta, with Tharisa PLC (LSE:THS, JSE:THA) tagged on as platinum group output to be in focus as automotive sales recover.”

“Gold stocks are seen as outperforming the market during the pullback phase, as in March 2020 and in the initial stages of a rebound, with top picks currently Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF), Pure Gold Mining Inc (TSX-V:PGM, LSE:PUR, OTC:LRTNF), Wheaton Precious Metals and Yamana Gold (TSX:YRI, LSE:AUY).”

Credit Suisse has also picked out stocks that have historically outperformed during recessions, highlighting:

“London Stock Exchange Group PLC (LSE:LSEG), RELX PLC (LSE:REL), Experian (LSE:EXPN) PLC, Microsoft Corporation (NASDAQ:MSFT) and Visa Inc (NYSE:V).”

Don’t panic

While there is nothing wrong with doing some periodic portfolio rebalancing and potentially rotating more assets into stocks seen as likely to thrive in a recession, don’t panic. Recessions have always come and gone as part of the economic cycle and stock markets traditionally go on to greater heights during the subsequent recovery.

That means the chances are your portfolio will regain its losses and add new gains over the years ahead. Buying cheap growth stocks seen as likely candidates to flourish again during the recovery could be seen as just as sensible a tactic as rotating into recession-proof stocks. But if you do decide to reposition to some extent, look for stocks that have not only historically done well during recessions, or could be expected to during this one ahead, but are also healthy companies you would expect to keep doing well when markets recover. Then your success won’t come down to the fickle fate of whether or not you get your timing right.

The post Stocks for a recession: which companies have historically done well during recessions or are likely to this time? first appeared on Trading and Investment News.

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Fatigue, headache among top lingering symptoms months after COVID

AUGUSTA, Ga. (Aug. 8, 2022) – Fatigue and headache were the most common symptoms reported by individuals an average of more than four months out from…

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AUGUSTA, Ga. (Aug. 8, 2022) – Fatigue and headache were the most common symptoms reported by individuals an average of more than four months out from having COVID-19, investigators report.

Credit: Augusta University

AUGUSTA, Ga. (Aug. 8, 2022) – Fatigue and headache were the most common symptoms reported by individuals an average of more than four months out from having COVID-19, investigators report.

Muscle aches, cough, changes in smell and taste, fever, chills and nasal congestion were next in the long line of lingering symptoms.

“Our results support the growing evidence that there are chronic neuropsychiatric symptoms following COVID-19 infections,” Medical College of Georgia investigators write in the journal ScienceDirect

“There are a lot of symptoms that we did not know early on in the pandemic what to make of them, but now it’s clear there is a long COVID syndrome and that a lot of people are affected,” says Dr. Elizabeth Rutkowski, MCG neurologist and the study’s corresponding author.

The published study reports on preliminary findings from the first visit of the first 200 patients enrolled in the COVID-19 Neurological and Molecular Prospective Cohort Study in Georgia, or CONGA, who were recruited on average about 125 days after testing positive for the COVID-19 virus.

CONGA was established at MCG early in the pandemic in 2020 to examine the severity and longevity of neurological problems and began enrolling participants in March 2020 with the ultimate goal of recruiting 500 over five years.

Eighty percent of the first 200 participants reported neurological symptoms with fatigue, the most common symptom, reported by 68.5%, and headache close behind at 66.5%. Just over half reported changes in smell (54.5%) and taste (54%) and nearly half the participants (47%) met the criteria for mild cognitive impairment, with 30% demonstrating impaired vocabulary and 32% having impaired working memory.

Twenty-one percent reported confusion, and hypertension was the most common medical condition reported by participants in addition to their bout with COVID-19.

No participants reported having a stroke, weakness or inability to control muscles involved with speaking, and coordination problems were some of the less frequently reported symptoms.

Twenty-five percent met the criteria for depression, and diabetes, obesity, sleep apnea and a history of depression were associated with those who met the criteria. Anemia and a history of depression were associated with the 18% who met the objective criteria for anxiety.

While the findings to date are not surprising and are consistent with what other investigators are finding, Rutkowski says the fact that symptoms reported by participants often didn’t match what objective testing indicated, was surprising. And, it was bidirectional.

For example, the majority of participants reported taste and smell changes, but objective testing of both these senses did not always line up with what they reported. In fact, a higher percentage of those who did not report the changes actually had evidence of impaired function based on objective measures, the investigators write. While the reasons are not certain, part of the discrepancy may be a change in the quality of their taste and smell rather than pure impaired ability, Rutkowski says.

“They eat a chicken sandwich and it tastes like smoke or candles or some weird other thing but our taste strips are trying to depict specific tastes like salty and sweet,” Rutkowski says. Others, for example, may rely on these senses more, even when they are preparing the food, and may be apt to notice even a slight change, she says.

Either way, their data and others suggest a persistent loss of taste and smell following COVID-19, Rutkowski and her colleagues write.

Many earlier reports have been based on these kinds of self-reports, and the discrepancies they are finding indicate that approach may not reflect objective dysfunction, the investigators write.

On the other hand, cognitive testing may overestimate impairment in disadvantaged populations, they report.

The first enrollees were largely female, 35.5% were male. They were an average of 44.6 years old, nearly 40% were Black and 7% had been hospitalized because of COVID-19. Black participants were generally disproportionately affected, the investigators say.

Seventy-five percent of Black participants and 23.4% of white participants met criteria for mild cognitive impairment. The findings likely indicate that cognitive tests assess different ethnic groups differently. And, socioeconomic, psychosocial (issues like family problems, depression and sexual abuse) and physical health factors generally may disproportionately affect Black individuals, the investigators write. It also could mean that cognitive testing may overestimate clinical impairment in disadvantaged populations, they write.

Black and Hispanic individuals are considered twice as likely to be hospitalized by COVID-19 and ethnic and racial minorities are more likely to live in areas with higher rates of infection. Genetics also is a likely factor for their increased risk for increased impact from COVID, much like being at higher risk for hypertension and heart disease early and more severely in life.

A focus of CONGA is to try to better understand how increased risk and effects from COVID-19 impact Blacks, who comprise about 33% of the state’s population.

A reason fatigue appears to be such a major factor among those who had COVID-19 is potentially because of levels of inflammation, the body’s natural response to an infection, remain elevated in some individuals. For example, blood samples taken at the initial visit and again on follow up showed some inflammatory markers were up and stayed up in some individuals.

These findings and others indicate that even though the antibodies to the virus itself may wain, persistent inflammation is contributing to some of the symptoms like fatigue, she says. She notes patients with conditions like multiple sclerosis and rheumatoid arthritis, both considered autoimmune conditions that consequently also have high levels of inflammation, also include fatigue as a top symptom.

“They have body fatigue where they feel short of breath, they go to get the dishes done and they are feeling palpitations, they immediately have to sit down and they feel muscle soreness like they just ran a mile or more,” Rutkowski says.

“There is probably some degree of neurologic fatigue as well because patients also have brain fog, they say it hurts to think, to read even a single email and that their brain is just wiped out,” she says. Some studies have even shown shrinkage of brain volume as a result of even mild to moderate disease. 

These multisystem, ongoing concerns are why some health care facilities have established long COVID clinics where physicians with expertise in the myriad of problems they are experiencing gather to see each patient.

CONGA participants who reported more symptoms and problems tended to have depression and anxiety.

Problems like these as well as mild cognitive impairment and even impaired vocabulary may also reflect the long-term isolation COVID-19 produced for many individuals, Rutkowski says.

“You are not doing what you would normally do, like hanging out with your friends, the things that bring most people joy,” Rutkowski says. “On top of that, you may be dealing with physical ailments, lost friends and family members and loss of your job.”

For CONGA, participants self-report symptoms and answer questions about their general state of health like whether they smoked, drank alcohol, exercised, and any known preexisting medical conditions. But they also receive an extensive neurological exam that looks at fundamentals like mental status, reflexes and motor function. They also take established tests to assess cognitive function with results being age adjusted. They also do at-home extensive testing where they are asked to identify odors and the ability to taste sweet, sour, bitter, salty, brothy or no taste. They also have blood analysis done to look for indicators of lingering infection like those inflammatory markers and oxidative stress.

Neuropsychiatric symptoms are observed in the acute phase of infection, but there is a need for accurate characterization of how symptoms evolve over time, the investigators write.

And particularly for some individuals, symptoms definitely linger. Even some previously high-functioning individuals, who normally worked 80 hours a week and exercised daily, may find themselves only able to function about an hour a day and be in the bed the remainder, Rutkowski says.

The investigators are searching for answers to why and how, and while Rutkowski says she cannot yet answer all their questions, she can tell them with certainty that they are not alone or “crazy.”  

One of the best things everyone can do moving forward is to remain diligent about avoiding infection, including getting vaccinated or boosted to help protect your brain and body from long COVID symptoms and help protect others from infection, Rutkowski says. There is evidence that the more times you are infected, the higher the risk of ongoing problems.

Rutkowski notes that their study findings may be somewhat biased toward high percentages of ongoing symptoms because the study likely is attracting a high percentage of individuals with concerns about ongoing problems.

SARS-CoV-2 is thought to have first infected people in late 2019 and is a member of the larger group of coronaviruses, which have been a source of upper respiratory tract infections, like the common cold, in people for years.

At least part of the reason SARS-CoV-2 is believed to have such a wide-ranging impact is that the virus is known to attach to angiotensin-converting enzyme-2, or ACE2, which is pervasive in the body. ACE2 has a key role in functions like regulating blood pressure and inflammation. It’s found on neurons, cells lining the nose, mouth, lungs and blood vessels, as well as the heart, kidneys and gastrointestinal tract. The virus attaches directly to the ACE2 receptor on the surface of cells, which functions much like a door to let the virus inside.

Experience and study since COVID-19 started both indicate immediate neurological impact can include loss of taste and smell, brain infection, headaches and, less commonly, seizures, stroke and damage or death of nerves. As time has passed, there is increasing evidence that problems like loss of taste and smell, can become chronic, as well as problems like brain fog, extreme fatigue, depression, anxiety and insomnia, the investigators write. Persistent conditions including these and others are now referenced as “long Covid.”

The research was supported by funding from the National Institute of Neurological Disorders and Stroke and philanthropic support from the TR Reddy Family Fund.

Read the full study.


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