Asia Stay-at-Home Basket of Stocks Boosted by Second Virus Wave

(Bloomberg) -- The recent outbreak of a second wave of coronavirus clusters in Asia have given so-called “stay-at-home” stocks a fresh leg higher.

A Bloomberg-compiled basket of shares including video games, internet services and health care names has jumped about 10% so far this month, well ahead of the near 4% rise in the MSCI Asia Pacific Index. That has extended the group’s outperformance over the benchmark to almost 30% since Asian markets started their coronavirus sell-off in mid-January.

A similar measure for just Japanese names, based on stocks chosen by Mizuho Financial Group Inc., has also trended higher, after hitting a relative peak over the Topix Index in April. Japan has had some success controlling the virus, for the most part avoiding surges seen in other countries.

Asia’s stay-at-home stocks are joining their U.S. peers in pushing higher as investors weigh continuing outbreaks of the coronavirus around the world. China is contending with a new cluster of more than 200 cases in Beijing since June 11 and new hot spots are also emerging in rural villages across India.

“The electronification of consumption is gaining even more speed as the risk aversion of consumers not wanting to leave home is added to secular trends already in place,” strategists at Morgan Stanley wrote in a June 21 note about the trend in North America. “Consumers who shift to e-commerce now are unlikely to return fully to in-person shopping even after the threat of Covid-19 has faded.”

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In Asia, video games and online diversions are dominating the top of the stay-at-home basket as bored consumers look for distractions while staying home.

Chinese mobile game developer FriendTimes Inc. is the top stock in the category since Jan. 20, more than doubling over that period and hitting a record high last week. Other gaming industry names including Shanghai-based Bilibili Inc., Nexon Co. and Capcom Co. in Japan and NCSoft Corp. in South Korea are up between 30% and 100% in the same period.

Health care names Alibaba Health Information Technology Ltd. and Ping An Healthcare and Technology Co. have also surged, while online delivery services Meituan Dianping and Demae-Can Co. round out the Top 10 performers list.

Still, not every name in the basket is a winner. Social-video platform operator Tian Ge Interactive Holdings Ltd. is the worst-performer, down over 50% since Jan. 20. First-quarter earnings plunged as the virus “challenges the business development of Tian Ge,” the firm said in a May 29 statement.

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