Santa Dip this December marks for a good point of entry

Banking & Finance
| The European | 6 December 2021

Comments from Mihir Kapadia, CEO of Sun Global Investments, a leading London-Dubai-Mumbai wealth management company

“A Santa rally in the markets is usually the norm in December, but with COVID-19 raging, this precedent is out of the window. The emergence of the Omicron variant has spooked the markets as concerns grow over its rapid transmissibility.

We may now be witnessing a ‘Santa Dip’, as US stocks and indices have had a significant decline over the last week over the concerns of the new variant. Tech stocks had a significant rout on Friday, with Tesla and Adobe declining more than 5%, while Apple and Microsoft were down more than 1%. Facebook had been down nearly 9% last week, while NASDAQ100 has been down 4% over the same period. Travel and leisure stocks have also had significant declines.

This notable stock market dip marks for an opportune moment for investing, and to readjust portfolios ahead of the new year. The key here is to back companies with strong fundamentals, which can weather any storm – the likes of Facebook, Apple and Microsoft are safe bets for a reason, and they may be currently primed for buying. However it’s likely that investors will be looking to lock-in and preserve their 2021 year to date profits   

Should the variant cause little to no hospitalisation, the rapid transmissibility may also mean we may have an end in sight for the pandemic. In such a scenario, we could perhaps expect 2022 to be the year of bumper returns. But as indicated, nothing is in black and white at the moment, and there is no historical precedent to compare.”

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