Amazon was a clear Wall Street winner from the coronavirus crisis. The online retailer and cloud computing giant's shares soared as much as 92 per cent during 2020, sending its market value to a record $1.77 trillion (€1.45 trillion) in September, as internet shopping exploded during the pandemic. After selling more than $10 billion of Amazon shares this year, founder Jeff Bezos still owns 10.6 per cent of the company – cementing his position as the richest person on Earth.
Brexit headlines continued to affect equity markets sentiment – particularly in the United Kingdom and Ireland during the course of 2020 – but sterling's movements against the US dollar provided the clearest read of the market's view of every development.
Covid-19: Western equity markets reached new highs almost daily through January and most of February, even as much of China went into lockdown to contain the new coronavirus that emerged in Wuhan. It was initially seen by investors as an Asian health issue, with the broader economic impact restricted to short-term supply-chain disruptions, manufacturing and Chinese consumer demand. European and US stocks started to sell off, however, in late February amid a spike in cases in Italy. It would become the story of 2020.
Dividends, an investor staple, became an early casualty of the coronavirus crisis. A slew of companies globally scrapped or delayed shareholder payments in March as they sought to save cash; avoid headlines of lining investors' pockets as governments committed trillions to keep businesses and households afloat; and, in the case of European banks and insurers, succumbed to regulatory pressure.
Easy money, whereby central banks use stimulus to get cash flowing through the economy, went into overdrive as monetary policymakers rushed to the aid of financial markets and economies as they cratered as Covid-19 struck. The aggressive multi-trillion bond-buying programmes and other initiatives underpinned a strong equities rally, led by US tech stocks, that would see Wall Street's S&P 500 reach fresh record highs as the year drew to a close.
Fundraisings through share sales were in vogue as companies spotted opportunities to get ahead of rivals – or potential balance-sheet issues. Publicly-quoted Irish companies alone raised more than €3.6 billion in 2020, led by Paddy Power owner Flutter Entertainment, which raised €2.1 billion in two share placings to bed in North American deals. Ryanair, Smurfit Kappa, Dalata Hotel Group, Greencore and Greencoat Renewables also raised equity.
Green and socially responsible investing, which had been gaining momentum in recent years as climate change and other social ills threaten to alter the capitalist landscape, ratcheted up a level during the pandemic. The global value of assets where investment decisions are driven by environmental, social and governance (ESG) data breached $40 trillion (€33.3 trillion) this year, according to the UN-backed Principles for Responsible Investment organisation.
Heraty is a name of an Irish stock market mainstay for more than two decades. But Anne Heraty, who became the first female chief executive of an Iseq company when she floated her staffing group CPL Resources in 1999, is set to bow out of the market early next year as the €318 million sale of the business to Japan's Outsourcing Inc goes through. Heraty and her husband and fellow director, Paul Carroll, will receive almost €110 million for their holdings. They will remain with CPL following the deal.
Irish Continental Group (ICG), owner of Irish Ferries, lost half its market value in the space of a month to mid-March as it became one of the worst-hit companies on the Iseq by Covid-19. The number of cars travelling on the group's ferries slumped almost 67 per cent in the first 10 months of the year, while container freight declined by 8.9 per cent and terminal lifts at ports dropped 11.7 per cent. Still, roll-on, roll-off freight – covering trucks and lorries – rose 4.4 per cent, according to ICG's most recent trading statement.
Jamaica-based Digicel, Denis O'Brien's telecoms group that operates across the Caribbean, Central America and Asia-Pacific, reminded investors of the perils of investing in debt with a low credit rating, or junk bonds. The company, which spent $6 billion developing its networks over almost two decades and at least $1.9 billion on dividends to O'Brien between 2007 and 2015, concluded a "distressed-debt restructuring" deal in June that saw bondholders write off $1.6 billion of what they were owed to bring its net debt down to a more sustainable $5.3 billion.
Kevin Toland, who was hired in 2017 as Aryzta's chief executive, saw his efforts to turn around the fortunes of the bakery group thwarted by Covid-19 and a group of activist shareholders that orchestrated a boardroom coup. By late November, Toland and the chairman who hired him, Gary McGann, were gone and their plan to sell the business was in tatters. The new chairman, Urs Jordi, plans to sell off more assets to slim down the business.
Lagarde and Lane, the European Central Bank double act (president Christine Lagarde and her dovish Irish chief economist Philip Lane), presided over getting members of the central bank's governing council to agree a massive €1.85 billion pandemic bond-buying programme and ultra-cheap loans to commercial banks. While Lagarde caused a spike in Italian bond market interest rates, or yields, in March saying the ECB was "not here to close spreads" between borrowing costs of euro-zone member states as Italy became Europe's Covid-19 ground zero, she would make it clear within a week that she would backstop governments as they borrowed billions to deal with the economic shock.
Market exits became a dominant theme on the Iseq as the year drew to a close. CPL's agreed takeover in November was followed in December by the Gallagher family behind housebuilder Abbey offering to mop up the 4.4 per cent of the business they do not already own. On the same day, forecourt retailer Applegreen's founding directors Bob Etchingham and Joseph Barrett, who own 41.3 per cent of the group, revealed they had joined forces with US investments giant Blackstone to plot a €718 million bid for the business.
The National Treasury Management Agency originally set out to borrow €10 billion-€14 billion in the bond markets this year, mainly to finance the repayment of maturing debt as the Government looked on track for a third broadly-based budget in a row. It would be forced to raise €24 billion by the end of the year to fund unprecedented wage subsidies and Covid-19 unemployment benefits, health spending and other supports to deal with the pandemic.
Oil prices turned negative in the US for the first time in history on April 20th – with West Texas Intermediate (WTI) benchmark falling to as low as minus $37.63 a barrel – amid a price war between oil giants Russia and Saudi Arabia and as the impact of the pandemic on demand meant that there was a severe shortage of storage for oil that was due to be delivered under financial contracts for May. WTI was heading back towards $50 by late December.
Provisions set aside by banks globally for problem loans soared to levels last seen during the financial crisis as Covid-19 hit the finances of households and businesses. The Republic's five retail banks set aside a combined €2.6 billion of provisions in the first half of the year for likely loan losses, and guided towards a full-year total of €3.6 billion – even as unprecedented industry-wide payment breaks and Government supports for families and firms cushioned the economic blow. The ECB said that non-performing loans across euro-zone banks may reach €1.4 trillion under a severe scenario.
Qasem Soleimani was the name on the lips of traders of everything from shares to gold in early 2020 as the top Iranian general's assassination by a US drone in Baghdad on January 3rd stoked tension between Washington and Tehran and rattled financial markets. A move within days by Iranian forces to shoot down a Ukrainian plane in error as they were on heightened alert prompted many to conclude at the time that the Middle East would dominate market sentiment this year.
Robinhood investors, named after the Robinhood Markets commission-free trading app, are a breed of amateur millennial-type stock-market punters that swelled in number during Covid-19 lockdowns – enticed by the strong stock-market rebound following the March sell-off. Some fund managers claim these small-timers actually fuelled the rally, buying on momentum and swarming around certain stocks, with little knowledge. Another investment may open to them soon. Robinhood is reportedly preparing to float next year at a valuation of more than $20 billion.
Smurfit Kappa shares quickly got over from an initial coronavirus slump to soar to levels above where they were trading in 2018 when the cardboard box maker was being stalked by unwanted suitor in the shape of US rival International Paper. The company has emerged in recent years as a likely winner from the growth in online commerce and a move by fast-moving consumer-goods companies towards sustainable packaging. Covid-19 has accelerated these trends.
Tesla, the electric carmaker founded by Elon Musk, may still be producing a fraction of the cars of industry leaders Volkswagen, Toyota and General Motors. But its shares soared nearly 700 per cent at one stage to value Tesla at more than $600 billion, making it the most valuable auto company in the world. This was driven as Tesla motored into profit, investors increasingly saw it more as a tech company as it progressed self-driving software, the company joined the S&P 500 stocks index and the shares became a favourite of the Robinhood brigade.
US elections gave investors plenty to mull over. Wall Street hadn't quite made up its mind on Joe Biden before the November presidential vote. After all, the US stock market typically has a negative immediate reaction to Democrats winning the White House. But the gradual easing of uncertainty surrounding the outcome of the race, as investors and households followed CNN veteran reporter John King's mastery of his magic wall, would see shares jump on November 9th, after Biden's election was called.
Vaccine news turbocharged equity markets on November 9th, as news broke that US pharma giant Pfizer and its German partner BioNTech reported that their candidate to stop Covid-19 in its tracks was more than 90 per cent effective in late-stage clinical trials. US rival Moderna was quick to follow suit with its vaccine, prompting hopes of widespread inoculation in the coming months.
Wirecard, the once high-flying German electronic payments company, imploded spectacularly over the summer as the company disclosed that €1.9 billion of cash on its balance sheet probably never existed. The former darling of the Frankfurt stock market, which had a market value of €24 billion at its peak in 2018, filed for insolvency in June.
Xavier Niel, the French billionaire and ultimate controlling investor in Eir, proved that there is plenty of money washing around the market looking for a man with a plan. Niel and two other partners raised €300 million in the initial public offering (IPO) in December of a shell company which has no assets as yet – but plans to buy several businesses in the organic-food and sustainable consumer-goods sectors. So-called special-purpose acquisition company IPOs are more prevalent in the US, where a record $75 billion was raised through such deals this year.
Yields on government bonds hit record lows during 2020 as central banks injected trillions into financial markets to keep the show on the road. The yield on the Irish 10-year Government bonds, which dipped below zero for the first time in August 2019, would fall to a fresh record of minus 0.32 per cent in early December.
Zoom Video Communications shares soared by up to 760 per cent to value the company at as much as $168 billion this year as it became the go-to site for arranging business meetings and family quizzes during the pandemic. The stock has fallen back from its highs in recent months, along with other "stay-at-home" stocks on the back of positive vaccine news.