When the markets collapsed back in March and then started to stage their recovery, all the talk was centred around what shape that recovery would take. Would it be V-shaped (a crazy idea at the time, but one which has pretty much held true for overall indices)? Many said it would be W-shaped and we would see a second sell-off – this never happened. Another option was an L-shaped recovery, but that was never on the cards as markets rallied fast off their lows. The last offering was a proposed U-shaped recovery.
The shape of the recovery, if we dig deeper into the market’s performance, is a K-shaped one. We have an upper leg that is booming. In the US, it’s the large tech stocks and locally, it’s miners. The lower leg is pretty much everything else, with some sectors, such as leisure, right at the bottom. Locally, the banks are also really holding on to that lower leg.
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